CLARKE v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2020] NZHC 63

CLARKE v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2020] NZHC 63 [4 February2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECRI-2019-404-000193[2020] NZHC 63BETWEEN STUART CLARKEAppellantAND MINISTRY OF BUSINESS, INNOVATIONAND EMPLOYMENTRespondentHearing: 13 December 2019 (further submissions received on 20 and23 December 2019)Appearances: J Grainger for the AppellantJ M Blythe and N E Town for the RespondentJudgment: 4 February 2020JUDGMENT OF WOOLFORD JThis judgment was delivered by me on Tuesday, 4 February 2020 at 9.00 a.m.Registrar/Deputy RegistrarSolicitors:Mr J Grainger, Public Defence Service, AucklandMs J M Blythe and Ms N E Town, Meredith Connell, Office of the Crown Solicitor, AucklandIntroduction[1] On 12 March 2019, Stuart Francis Clarke was sentenced to three years'imprisonment after pleading guilty to seven charges under the Insolvency Act 2006.1The two lead charges were concealing and fraudulently removing property. He nowappeals against sentence on two grounds:2(a) There was an error in sentencing as the appellant accepted certainaggravating facts (relating to the value of his accountancy practice andhis shareholding in the company Trinity Street Properties Ltd) for thepurposes of sentencing to avoid a disputed fact hearing, and thisacceptance of aggravating facts was induced by incorrect advice givenby his previous counsel as to the likely sentence he would receive if heaccepted those facts. If this ground is upheld, the appellant seeks tohave his sentence quashed and the matter remitted to the District Courtfor a disputed facts hearing as to the value of his practice and shares inthe company.(b) In the alternative, the sentence imposed was manifestly excessive.Factual background[2] The appellant was a registered accountant operating an accounting practiceunder the name CK Accountants. On 27 March 2014, he was adjudicated bankrupt onthe application of Westpac Bank. Westpac's claim amounted to $322,342.95.[3] On 13 February 2018, the appellant pleaded guilty to the following charges.(a) Materially contributing to or increasing the extent of his insolvency byunjustifiable spending or extravagance in living3[4] Westpac filed the application for the appellant's adjudication on 6 December2013. Between this date and the date of his adjudication on 27 March 2014 (a period1 Ministry of Business, Innovation and Employment v Clarke [2019] NZDC 4645.2 Criminal Procedure Act 2011, s 250.3 Insolvency Act 2006, s 419(2).of approximately 16 weeks), the appellant spent a total of $27,149.48 at restaurantsand bars ($1,696.84 per week). He also withdrew a total of $29,525.60 in cash duringthis period ($1,845.35 per week).[5] In the period after the date of his adjudication to 28 May 2014 (a period ofapproximately five weeks), the appellant spent a total $13,625.83 at restaurants andbars ($2,725.17 per week). He also withdrew a total of $13,860 in cash during thisperiod ($2,772 per week).[6] This spending totalled $84,160.91 over 21 weeks ($4,007.66 per week).(b) Being an undischarged bankrupt, taking part in the management or control ofa business without the consent of the Official Assignee or the Court, withoutreasonable excuse4[7] The appellant continued to operate his accounting practice after he wasadjudicated bankrupt. He continued to see clients, complete tax returns on behalf ofclients, and receive tax refunds on behalf of clients. He also continued to receivepayments of fees from clients.[8] The appellant engaged Merilyn Mason as a practice manager prior to hisbankruptcy and was responsible for paying her wages. He continued to employMs Mason until October 2014. He had also employed and supervisedMaya Budyurina as a bookkeeper and was responsible for paying her wages. Theappellant supervised and gave instructions to both Ms Mason and Ms Budyurina inthe running of the business, including changing details on the Companies Register.The appellant was the sole accountant in the business and made significant decisionsin respect of the business. At times, in his emails to the Official Assignee, theappellant's email address would have the tag "CK Management and Tax Accountants".4 Sections 149(1)(a) and 436(1)(b).(c) Failing without reasonable excuse to file a statement of affairs in theprescribed form with the Official Assignee5[9] Following numerous requests, two summonses and an examination on oath,the appellant submitted a statement of affairs on 12 November 2014. It was, however,incomplete. Question 5 asked him to provide details of all the income he received.He crossed this part out and has never provided this information to the OfficialAssignee. Question 9(a) asked him for details of his household income andexpenditure. He did not fill this in and instead wrote that these were "to be provided".Up to the date of his plea, the appellant had not provided these in a complete form.(d) Failing to keep and preserve proper record of transactions6[10] The appellant failed to keep and preserve a proper record of the transactionsfor the period during the three years immediately prior to his adjudication, where hemight reasonably be expected, because of his occupation or transactions for the period,to keep a record of those transactions, and failed to keep and preserve a proper recordof the transactions in relation to 13 nominated companies and two nominated trusts.(e) Failing or refusing, without reasonable excuse, to answer any question put tohim by the Official Assignee7[11] The Official Assignee made repeated requests for information about, anddocuments in relation to, eight nominated companies and two nominated trusts. Theappellant either confirmed that he did hold documents relating to the nominatedentities which the Official Assignee had requested, but did not provide the documentsto the Official Assignee, or alternatively, he confirmed that there were relevantdocuments in relation to the nominated entities, but prevaricated in his answer bydirecting the Official Assignee to a third party to obtain them, rather than providingthem directly to the Official Assignee.5 Sections 67 and 433(1)(a).6 Section 429(1).7 Section 440(1)(c).(f) Concealing funds, totalling $78,048.49, in an ANZ Bank account in the nameWellpark Trustees No 5 Ltd8[12] Wellpark Trustees No 5 Ltd was incorporated on 8 December 2009. Theappellant was the sole director from the date of incorporation until 1 March 2014.However, this change was only presented to the Companies Office on 16 April 2014by Ms Mason. That is, until 16 April 2014, the appellant would have appeared on theCompanies Register as the sole director of this company.[13] The current sole director is Tracy Janine Perillo (also known as Tracy Kerr-Bell). She was appointed a director on 31 January 2014, although the change ofparticulars of director was only presented to the Companies Office on 28 March 2014(the day after the appellant's adjudication) by Ms Mason on instructions from theappellant. Despite Ms Perillo being the sole director of the company, the companywas exclusively controlled by the appellant.[14] The appellant was the sole signatory to the bank account in the name ofWellpark Trustees No 5 Ltd. The appellant was obliged to complete a statement ofaffairs and notify the Official Assignee of any bank accounts he controlled. He didnot disclose this bank account or the funds in it. By this non-disclosure, he concealedthe funds in the bank account from the Official Assignee. After the date of hisadjudication, a total of $78,048.49 was deposited into this bank account. Some of thismoney comprised of fees from his accounting practice that he was prohibited frommanaging.(g) Fraudulently removing property to the value of $500 or more by transferringhis shares in Trinity Street Properties Ltd to Wellpark Nominees 2013 Ltd andthen transferring his shares in Wellpark Trustees Ltd and Wellpark Nominees2013 Ltd in each company to the other company to create a circularshareholding9[15] Trinity Street Properties Ltd was incorporated on 17 August 2010. Theappellant was a director until 31 January 2014 (though this change of particulars was8 Section 420(2)(a).9 Section 420(2)(c).not presented to the Companies Office until 27 March 2014, meaning that the appellantwas shown on the Companies Register as a director until the date of adjudication).[16] Prior to the appellant's adjudication, he owned 25 per cent of the shares inTrinity Street Properties Ltd. The appellant's ex-spouse, Mary Kane, owned theremainder. The company owns a property at 30 Trinity Street, Ponsonby, Auckland.Prior to the appellant's separation from his spouse, this property used to be the familyhome. The appellant's ex-spouse and his children still live in the property.[17] On the date of his adjudication (27 March 2014), the appellant was removedas a shareholder and replaced with Wellpark Nominees 2013 Ltd. Wellpark Nominees2013 Ltd was effectively controlled by the appellant. This transfer was carried out onthe appellant's instructions in order to put this property out of the Official Assignee'sreach upon his adjudication.[18] Wellpark Trustees Ltd was incorporated on 3 April 1998. The appellant was adirector until 7 November 2014. Ms Kerr-Bell (also known as Ms Perillo) wasappointed a director on 24 October 2014. Despite Ms Kerr-Bell's involvement, theappellant had exclusive control of the company. The company was the soleshareholder of Wellpark Private Financial Ltd and Clearkleen Racking Systems Ltd,which were also controlled by the appellant. Both before and after his adjudication,the appellant operated his accounting business using these two companies.[19] Wellpark Nominees 2013 Ltd was incorporated on 20 March 2013. While thecompany's sole director from the date of incorporation was Ms Kerr-Bell, thecompany was effectively controlled by the appellant. The appellant was the soleshareholder in Wellpark Trustees Ltd and Wellpark Nominees 2013 Ltd from the dateof their incorporation until the date of his adjudication.[20] On the date of adjudication, 27 March 2014, the appellant's shareholding inWellpark Nominees 2013 Ltd was transferred to Wellpark Trustees Ltd. Theappellant's shareholding in Wellpark Trustees Ltd was also transferred to WellparkNominees 2013 Ltd. Essentially, the shareholding of both companies is circular. Theappellant gave instructions for these changes to be made in order to put hisshareholdings in these companies out of the Official Assignee's reach upon hisadjudication.[21] Of the seven charges to which the appellant pleaded guilty, four did not ascribeany monetary value to the offending (managing a business, failing to file a statementof affairs, failing to keep and preserve records, and failing to answer questions). Twofurther charges ascribed a monetary value in respect of which there was no issue(concealing funds of $78,048.49 in an ANZ Bank account in the name of WellparkTrustees No 5 Ltd, and extravagant spending totalling $84,160.91 over a 21-weekperiod following the filing of the application for the appellant's adjudication).[22] There was, however, one charge in respect of which there remained an issue asto the monetary value of the offending. As amended, the charge related to thefraudulent removal of property to the value of $500 or more by transferring his sharesin Trinity Street Properties Ltd to Wellpark Nominees 2013 Ltd and the subsequenttransfer of his shares in Wellpark Trustees Ltd and Wellpark Nominees 2013 Ltd, ineach company to the other company, to create a circular shareholding.[23] The prosecutor obtained two formal statements from aPriceWaterhouseCoopers partner specialising in restructuring and corporate finance.He valued the 25 per cent shareholding in Trinity Street Properties Ltd as between$183,962 and $344,610, and the value of the appellant's accounting business, whichhe operated through a subsidiary company of Wellpark Trustees Ltd, as between$89,000 and $265,000.[24] The appellant disputed those figures and sought a disputed facts hearing. Heassesses the value of the shareholding in Trinity Street Properties Ltd as somewherebetween $5,000 and $20,000 because there is, in fact, no market for a 25 per centshareholding in a privately held company. He was of the view that it would be verydifficult to realise the assets from the company. It may be that there would be someonewho would buy the shareholding for a nominal value in the hope that one day his ex-spouse may put the company into liquidation, but he said that this would just be ahope.[25] The appellant is also of the view that, in reality, CK Accountants had no value.Once he lost his tax agency status because of his bankruptcy, all his clients wentelsewhere. The business leased premises and owned minimal chattels, such as oldcomputers, printers and some office furniture.[26] A disputed facts hearing was, therefore, set down for 30 October 2018. Whathappened at the hearing on 30 October 2018 is in dispute. I heard evidence from boththe appellant and his trial counsel, Mr Bioletti, to which I will refer later. In the event,the appellant wrote out and signed a statement as follows:I, Stuart Francis Clarke, agree for the purposes of sentencing that the value ofthe accountancy business is $100,000 and the value of the shares in TrinityStreet Properties Limited is $180,000 – and on that basis we do not require aformal disputed facts hearing.[27] The case was then adjourned for sentencing.District Court sentencing[28] Sentencing occurred on 12 March 2019. First of all, Judge K G Glubbreviewed the evidence in some detail. He then looked at the aggravating factors of theoffending and expressed the view that the principal aggravating factor was planningand premeditation. The appellant was a chartered accountant and knew precisely whathe was doing. The Judge said he embarked on a deliberate course of conduct tofrustrate and defeat his creditors' claims by failing to co-operate with the OfficialAssignee and by concealing and fraudulently removing property as specified. Thisdemonstrated to the Judge a high degree of planning and premeditation.[29] Then there was the extent of the loss and harm to the creditors. The Judge wasof the view that a significant portion of the core claims of $1.7 million may well havebeen able to have been met from the property that was concealed, estimated by theCrown as between $351,717 and $717,658.49.10 The Judge then noted that theacknowledgement and acceptance of the value of $358,000 by the appellant.1110 Which sums included the funds in the Wellpark Trustees No 5 Ltd bank account of $78,048.49.11 Comprised of $180,000 for the Trinity Street Properties Ltd shares, $100,000 for the accountingpractice and $78,048.49 in the Wellpark Trustees No 5 Ltd bank account.[30] The Judge did not, however, reach any conclusion on the total amountconcealed and fraudulently removed. He stated:12[27] However, there is no way of precisely fixing that amount given youhave steadfastly failed to co-operate with the Official Assignee to the extentthat you failed to file a statement of affairs through to this day, you have failedto answer questions as required, and you failed to keep records of transactionsor assets for the Official Assignee to assess. I am satisfied that that wasongoing obfuscation on your part. That is significant in the Court'sassessment.[31] The Judge then referred to three further aggravating factors. First, there wasthe risk to the business community. The appellant continued to operate his accountingpractice without consent after adjudication. He received funds and was required toaccount for his clients. The Judge thought there was an on-going risk to them at thetime.[32] Secondly, there was the impact on the victims, which the Judge regarded assignificant. He said that business entities are entitled protection from this sort of lossand it affected them significantly.[33] Thirdly, there was the duration of the offending, specifically, in continuing tomanage his accounting practice. The appellant had continued to trade through to12 November 2014, eight months after his adjudication.[34] The Judge then referred to the purposes and principles of sentencing and thecontents of a pre-sentence report. He then noted the submissions of both prosecutioncounsel and Mr Bioletti, assisting the Court.[35] The Judge considered that the offending was discrete and required cumulativesentences. In setting a starting point, the Judge referred to a number of authorities.13He was satisfied that the appropriate starting point on the most serious charges, that ofconcealing and fraudulently removing property, was one of 28 months' imprisonment.He then turned to what he called the administrative offences: failing to file a statement12 Ministry of Business, Innovation and Employment v Clarke [2019] NZDC 4645.13 R v Holt [2006] DCR 669 (CA); R v Varjan CA97/03, 26 June 2003; R v Raymond CA183/01,9 October 2001; Ministry of Economic Development v Rippin DC Auckland CRI-2012-004-5351,26 February 2014, aff'd in Rippin v R [2014] NZCA 177; Ministry of Economic Development vPapa DC Manukau CRI-2009-092-14907, 2 June 2010; and R v King [2015] NZDC 24712.of affairs, failing to keep and preserve records, and failing to answer questions. Heuplifted the 28-month starting point by six months for these administrative offences.[36] He then turned to the extravagant spending charge, which he saw as adeliberate course of conduct shortly before and then immediately after hisadjudication. He adopted a starting point for the extravagant spending of six months'imprisonment, which he added to the previous sentence. Finally, he turned to the lastremaining charge of managing the accounting practice while he was bankrupt andadopted a further starting point of eight months' imprisonment. This led the Judge toa revised starting point of 48 months' imprisonment. He then stood back from thattotal and assessed whether, on the basis of totality, that was too high. He was satisfiedthat it was and pulled the figure back by eight months, which brought him back to40 months' imprisonment.[37] From that, the Judge gave a 10 per cent credit to the appellant for his guiltypleas, which brought the final sentence down to one of 36 months' imprisonment.[38] With respect, the Judge's sentencing approach is somewhat difficult to follow.Having made the above calculations, the Judge dealt with the individual charges asfollows:(a) On the charges of concealing property and fraudulently removingproperty, the appellant was sentenced to two years' imprisonment;(b) On the charge of failing without reasonable excuse to file a statementof affairs, the appellant was sentenced to four months' imprisonment,cumulative on the fraudulently removing property charge;(c) On the other administrative charges of failing to keep and preserverecords and failing to answer questions, the appellant was sentenced tofour months' imprisonment, concurrent with the four months imposedcumulatively for the failing to file a statement of affairs;(d) On the charge of materially contributing to or increasing the extent ofinsolvency by unjustified or extravagant expenditure, the appellant wassentenced to four months' imprisonment, cumulative on the charge offailing to supply a statement of affairs; and(e) On a charge of managing a business while an undischarged bankrupt,the appellant was sentenced to four months' imprisonment, cumulativeon the charge of unjustified or extravagant expenditure.[39] Accordingly, the total sentence imposed was one of three years' imprisonment.Ultimately, for the purposes of the appeal, what is relevant is not the sentencingapproach adopted, but the end sentence imposed by the Judge, namely, three years'imprisonment.Previous cases[40] I was referred to a number of cases, including sentencing notes from both theDistrict Court and the High Court. Three decisions of the Court of Appeal are,however, of most relevance. Each involved an appeal against sentence imposed in theDistrict Court or High Court.[41] First, in R v Raymond, Mr Raymond was convicted of two charges after a five-day hearing in the Auckland District Court.14 The first charge was that he concealedpart of his property, namely a Breitling watch valued about $2,000 and stereoequipment valued at about $35,000. The second charge was that he materiallycontributed to his insolvency by gambling, rash or hazardous speculation, unjustifiablespending or extravagance in living. The Judge found that Mr Raymond had leased anexpensive motor vehicle and had a share in a helicopter, which together had costbetween $8,000 and $10,000 per month. The Judge also found that Mr Raymond'sgambling had diminished his available estate by a sum well in excess of $100,000.[42] In the District Court, Mr Raymond had been sentenced to six months'imprisonment on the concealing property charge and a concurrent term of 13 months'14 R v Raymond CA183/01, 9 October 2001.imprisonment on the extravagant spending charge. Leave was given for Mr Raymondto apply for home detention.[43] The Court of Appeal stated:[42] We note that the Judge did not expressly address in his sentencingremarks ss 6 and 7 of the Criminal Justice Act. However, we are not convincedthat the offending in this case is to be regarded as simply property offending.Insolvency is a statutory process, it enables debtors to be released from theburden of unmanageable debts at the expense of creditors. Its processes aredependent upon proper disclosure and co-operation with the OfficialAssignee. Dishonesty or fraudulent conduct which frustrates the properadministration of an insolvent's estate is not easily detected. It goes to theheart of the system. In this respect it can be likened to interference with thecourse of justice.[44] The Court of Appeal dismissed the appeal against sentence, noting:[45] The totality of the offending involving both offences, the first havingan element of fraud in the concealment of assets, and the second seriousrecklessness, or worse, in the dissipation of creditors' money, leaves us in nodoubt that the scale of offending fully warrants a sentence of imprisonment.It could not be said that misappropriation of moneys well in excess of$100,000 in other circumstances should not be met with a custodial sentence.[45] Secondly, in Burchell v R, Mr Burchell was convicted of two charges after trialin the High Court at Auckland.15 Both charges related to the carrying on of businesswhile an undischarged bankrupt without the consent of the Official Assignee. Theyrelated to businesses that Mr Burchell continued to run after his bankruptcy. The firstwas a homestay business and the second was a property investment scheme underwhich Mr Burchell had sought to pool investors' money to buy investment properties.The Crown estimated that the losses in respect of the homestay business may be in theregion of $90,000 to $100,000. No property was ever purchased by the secondbusiness, but at least one person lost "what was for him a substantial sum of money".16[46] In the High Court, Mr Burchell was sentenced to nine months' imprisonmenton the first charge and a concurrent term of three months' imprisonment on the secondcharge.15 Burchell v R [2010] NZCA 252.16 At [6], citing R v Burchell HC Auckland CRI-2005-044-7058, 4 December 2007 at [3].[47] The Court of Appeal noted that in concluding that a term of nine months'imprisonment was appropriate, the High Court Judge emphasised the protective natureof the legislation and the resultant need for deterrence. The Judge said the lossesincurred were "not readily calculable", but that even if they were less than half of theCrown's estimate, people who had worked hard for their money had lost it.17[48] The Court of Appeal stated:18 the Judge made it clear the amounts involved were not the critical featurein sentencing. That reflected the evidence at trial, where the actual amountsinvolved were not at the forefront of the case. In part, this was becauseaccurate records were not kept.[49] The Court of Appeal concluded that the sentence imposed, while stern, waswithin the available range. The aggravating factors were seen as Mr Burchell's blatantdisregard for the conditions of his bankruptcy, the fact individuals lost money and thelevel of planning involved.[50] The Court of Appeal stated:[40] The Judge in sentencing relied on R v Holt. While there is no tarifffor this offending, Courtney J's approach [in the High Court] is consistent withthat taken in Holt. This Court in Holt upheld an effective sentence of ninemonths imprisonment on two counts under s 128A of the Insolvency Act forsimilar offending. Both counts involved ongoing activity in the face ofwarnings from the Official Assignee.(footnotes omitted)[51] Thirdly, in Andrews v R, Mr Andrews was convicted of 11 charges after trial inthe Tauranga District Court — seven charges of carrying on management of a business,one charge of obtaining credit of $100 or more, one charge of obtaining property oncredit by false representation and two charges of concealing property.19[52] In the District Court, Mr Andrews was sentenced to 15 months' imprisonment.He did not challenge the term of imprisonment but appealed the Judge's refusal togrant him leave to apply for a substituted sentence of home detention.17 At [32].18 At [35].19 Andrews v R [2013] NZCA 281.[53] The charge of obtaining credit related to a six-month fixed term rental contract,while the charge of obtaining credit by false representation lead to a debt of $1,566.As to the charges of concealing property, an analysis of a Kiwibank account showedMr Andrews had received funds totalling $100,030.57, which had been deposited intothat account.[54] The Court of Appeal dismissed the appeal, stating:[21] There is no tariff case for offending of this kind and we accept thatimprisonment is not inevitable for this type of offending. However, judgessentencing on such offending are invariably concerned to reinforce thepurpose of the legislation. As a result, deterrence, both general and personal,is usually a significant factor in sentencing. Recent similar cases, includingthose in which the possibility of home detention was specifically considered,have all resulted in terms of imprisonment being imposed.Approach to appeal[55] The Criminal Procedure Act 2011 sets out that a first appeal court must allowan appeal against sentence if it is satisfied that:20(a) for any reason, there is an error in the sentence imposed on conviction;and(b) a different sentence should be imposed.[56] This court must point to an error made by the District Court, either in theJudge's reasoning or shown by additional material considered on appeal.21 The errormust be adequately significant for the appeal to be allowed — although the CriminalProcedure Act 2011 does not require the sentence to be 'manifestly excessive', this isa helpful concept when considering the seriousness of the error.22 If the Courtdetermines that the appeal should be allowed on the basis of counsel error, the sentencecan be remitted to the District Court.2320 Criminal Procedure Act 2011, s 250.21 Tutakangahau v R [2014] NZCA 279 at [30].22 At [35].23 Criminal Procedure Act 2011, s 251.Appellant submissionsTrial counsel error[57] A key issue for sentencing was the value of the property that the appellantconcealed. At the disputed facts hearing on 30 October 2018, a question arose as towhether the appellant was able to rely on his own valuation of his accounting practiceand 25 per cent share in Trinity Street Properties Ltd as opposed to seeking anindependent valuation. He maintained they both had no real value. The respondenthad obtained valuations from David Bridgman, a partner at PriceWaterhouseCoopers.The appellant disputed Mr Bridgman's expertise in dealing with small and mediumenterprises.[58] If the value of the appellant's accounting practice and 25 per cent share inTrinity Street Properties Ltd could not be determined on 30 October 2018, the nextavailable date for a disputed facts hearing was 14 March 2019. The Judge stood thematter down to enable discussions between the parties. Following those discussions,the appellant signed a note accepting the value of the accounting practice was$100,000 and the value of his shareholding in Trinity Street Properties Ltd was$180,000. The presiding Judge found the difference between this valuation andrespondent's valuation was not so significant as to require a disputed facts hearing.[59] The appellant now asserts that he was incorrectly advised by his trial counsel,Mr Bioletti. The appellant deposes in his affidavit that Mr Bioletti told him that if heaccepted the figures of $100,000 and $180,000, he would likely be granted bail andreceive a sentence of home detention.[60] Counsel for the appellant submits that he should have had the opportunity tochallenge those values at a disputed facts hearing and as such a miscarriage of justiceoccurred. Regarding the appropriateness of Mr Bioletti's alleged advice about homedetention, counsel pointed to cases suggesting that, even with the accepted valuation,imprisonment was still the most likely outcome given the other charges the appellantwas facing.Was the sentence manifestly excessive?[61] Counsel for the appellant submits that the starting point for the two leadcharges was excessive. Both charges related to the same type of offending: moving orhiding assets with the effect of obstructing the duties of the Official Assignee. Themaximum penalty for each charge is three years' imprisonment, so counsel submits astarting point of 28 months' imprisonment represents the top end of the availablesentence. Counsel referred to the following cases:(a) In R v Raymond, the appellant was a third time bankrupt. He wasconcurrently sentenced to 13 months' imprisonment for increasing theextent of his insolvency through gambling and extravagance in living,and six months' imprisonment for concealing assets (a $2,000 watchand $35,000 stereo equipment). His appeal was dismissed.24(b) In Ministry of Economic Development v Papa, the defendant wasemployed as a project manager for two years without the approval ofthe Official Assignee, receiving payments of $336,087.92 in relation tothese business dealings. A starting point of 12 months' imprisonmentfor concealing property and being involved in the administration of abusiness while bankrupt was adopted, which was commuted to homedetention.25(c) In Andrews v R, the appellant controlled and directed businessesrelating to the sale of laser hair removal systems. He further concealed$100,030.57 in a bank account. The District Court Judge described himas a serial liar and adopted a global starting point of 18 months'imprisonment in relation to all offending. This starting point was notdisturbed on appeal.2624 R v Raymond CA183/01, 9 October 2001.25 Ministry of Economic Development v Papa DC Manukau CRI-2009-092-14907, 2 June 2010.26 Andrews v R [2013] NZCA 281.(d) R v Rippin involved an offender concealing over $277,000 in anundisclosed bank account.27 A starting point of 18 months'imprisonment was adopted. A 10 per cent discount was grantedbecause the Official Assignee had failed to pursue matters, as well as20 per cent and 10 per cent discounts for the offender's ill health andgood record. The end sentence was one of five months' homedetention, which was acknowledged by the offender's counsel onappeal to be lenient.28[62] Counsel accepts that, in the present case, the appellant's premeditation and thesignificant value of the concealed and fraudulently removed property arguably makesthe offending more serious than any of these cases. However, it is submitted that theoffending is not so severe as to deserve a starting point of 28 months' imprisonment.Counsel submits that a starting point in the range of two years' imprisonment wouldhave been appropriate.[63] The appellant submits that the eight-month uplift for managing a businesswhilst an undischarged bankrupt was also manifestly excessive. The appellant did notcause any loss from continuing to run his business, which distinguishes this case fromother cases. The offending was relatively unsophisticated compared to the appellant'sother offending.Respondent submissionsTrial counsel error[64] Counsel for the respondent submits that Mr Bioletti did not provide incorrectadvice. In an affidavit for the Court, Mr Bioletti deposes that he did not advise theappellant that resolving the disputed facts issues would mean a sentence of homedetention would be likely or that he would be granted bail. He did not suggest that theissue of bail was connected in any way to the factual dispute. While he did advise thatany reduction in the estimated value of the concealed and fraudulently removedproperty would assist the appellant in terms of sentencing outcome, he did not advise27 R v Rippin DC Auckland CRI-2012-004-5351, 6 November 2013.28 Rippin v R [2014] NZCA 177 at [2].it would make home detention likely. He states that as a matter of practice he nevermakes guarantees regarding sentencing outcomes and that, in this case in particular,he was aware that the respondent would still be seeking a sentence of imprisonmentregardless of the reduction in the agreed value of the concealed and fraudulentlyremoved property.[65] Counsel for the respondent notes that, by the time of the disputed facts hearing,the prosecutor had made its position on sentencing clear. At the hearing on 30 October2018, prior to the appellant signing instructions, the prosecutor confirmed that asentence of imprisonment would still be sought, although the starting point would beless than five years. The value of the property was not the only important factor forsentencing, given the extensive nature of the appellant's offending. The presidingJudge is recorded as advising the appellant, before he accepted the agreed values, asfollows:So what would happen today is it would go to a sentencing date for you to putup all your pleas in mitigation as to why you did this offending. The mostaggravating feature of the offending is the fact you did it, sir, not so muchabout the values. The values are not perfect, the prosecution would disagreewith you, they would say they were higher, you say they're lower. This is apurely pragmatic amount that I think is not going to impact either way to yourdetriment or to your favour on the sentencing.[66] The presiding Judge also said she would grant bail pending sentence to enablethe appellant to formulate a case for home detention:It gives him a better chance to be interviewed for his PAC report and, if hewants to put up an option of home detention, he can. I am not saying that is apossibility. It is very likely that [the prosecutor is] quite right that theseriousness of the charge is going to merit a full-time custodial sentence but Idon't agree that is absolute.[67] Accordingly, counsel for the respondent submits it was extremely unlikely thatthe appellant had the impression he would receive home detention if he agreed valuesof $100,000 and $180,000 for his accounting practice and his shares in Trinity StreetProperties Ltd. Counsel also submits that the appellant has not shown he has areasonable prospect of success should the matter be remitted for a disputed factshearing. He has not provided any independent expert evidence to support hisvaluations despite being put on notice on 30 October 2018 that he could not giveevidence as an expert in his own case.Was the sentence manifestly excessive?[68] As well as R v Raymond and R v Rippin, counsel for the respondent suggestsR v Noel is relevant to the starting point.29 In that case, the defendant pleaded guiltyto 10 charges, including concealing payments over one year worth $345,821 andobtaining credit as a bankrupt on six occasions, totalling $33,348.78. A global startingpoint of 18 months' imprisonment was adopted for all charges.[69] Counsel for the respondent submits the value of the property concealed by theappellant was higher than each of those cases and that the offending involved a higherlevel of premeditation. His conduct went beyond failing to disclose deposits into abank account (as occurred in Rippin and Noel) or the existence of valuable property(as in Raymond). The offending was much more involved and he took proactivemeasures to put his property outside the reach of the Official Assignee, includingputting figurehead directors in place and creating a circular shareholding structure.When these factors are considered, it is submitted that the starting point of 28 months'imprisonment was within range.[70] Counsel for the respondent also submits that the uplift for managing a businesswhilst bankrupt was not excessive. The appellant ran the business for over eightmonths. He provided financial services to the public, operating without supervisionand supervising others in providing financial services. There was no financial loss toclients, but that is not the sole factor to be considered when assessing culpability.DiscussionTrial counsel error[71] In his affidavit, affirmed on 3 December 2019, the appellant states there weretwo matters he contested about the circumstances in which he signed the documentagreeing values of his accounting practice and shares in Trinity Street Properties Ltd:29 R v Noel DC North Shore CRI-2016-044-2237, 15 December 2016.(a) He was told by Mr Bioletti that he would be in range to, and wouldlikely receive, a sentence of home detention if he agreed the values, andwould likely be granted bail; and(b) He did not have the opportunity to review the disclosure relating to thecase — in particular, the updated statement of Mr Bridgman prior toagreeing the values.[72] In a reply affidavit, affirmed on 6 December 2019, Mr Bioletti states he did notadvise the appellant that he would likely receive a sentence of home detention or begranted bail by agreeing the values. In terms of sentencing outcome, Mr Bioletti stateshe advised the appellant that any reduction in terms of the total value of propertyfraudulently removed would assist him at sentencing. Mr Bioletti states, as a matterof practice, he never makes any guarantees to clients about sentencing outcomes asthat is a matter ultimately for the Court.[73] The issue of trial counsel error only arose six months after the sentence wasimposed on 12 March 2019. The original notice of appeal, signed by the appellant on11 April 2019, contained only one ground of appeal, namely, the sentence wassubstantially excessive, relative to recent case law. The appeal was set down forhearing on 26 August 2019. Submissions were filed by his counsel on 12 August 2019.They reiterated the grounds of appeal as:(a) The starting point on the lead charge of concealing and fraudulentlyremoving property was excessive; and(b) The uplift for managing a business while bankrupt was also excessive.[74] On 16 August 2019, for the first time, counsel for the appellant advised theCourt that the appellant wished to advance a further ground of appeal, namely, that amiscarriage of justice had occurred because when he agreed values on 20 October2018 he believed that bail pending sentence was contingent on him agreeing to resolvethe factual dispute without a hearing and this was (allegedly) done upon the receipt ofincorrect legal advice from previous counsel about his likely sentence.[75] When he gave evidence before me, however, the appellant resiled somewhatfrom his affidavit. He did not say that he was told by Mr Bioletti that he would likelyreceive a sentence of home detention if he agreed the values. Rather than being alikely sentence, the appellant told me in evidence-in-chief that Mr Bioletti advised himthat home detention was still a possibility if he agreed the values. In cross-examination, he confirmed that evidence:A. He said, his words were that it's still a distinct possibility the Courtstill had the option of home detention. He didn't say, "sign this, youwill get home D", he didn't say that. He said that it was still a distinctpossibility that home D was available to the Court to the Judge.Q. Distinct possibility?A. Yes.[76] In his evidence, Mr Bioletti confirmed that he may have said to the appellantthere was a possibility of home detention, but he was pretty cautious and would nothave said to him "You'll likely get home detention" because that is just not somethinghe would say.[77] A possibility, or even a distinct possibility, is quite different from a likelihood.I accept that Mr Bioletti advised the appellant that there was a possibility that he wouldreceive a sentence of home detention. Mr Bioletti is, however, an experienced counseland would not have told the appellant that home detention was the likely outcome. Inevidence before me, the appellant did not say that he did.[78] The advice that home detention was a possibility was, in any event, not wrong.A pre-sentence report prepared for the 23 March 2018 sentencing date recommendedhome detention. On 20 October 2018, the presiding Judge granted the appellant bail,which she said gave him a better chance to be interviewed for his PAC report andenabled him to put up an option of home detention, if he wanted to. She also said afull-time custodial sentence was not "absolute". In Andrews, the Court of Appeal saidthat imprisonment was "not inevitable" for this type of offending.3030 Andrews v R [2013] NZCA 281.[79] As to bail, the appellant told me in cross-examination that Mr Bioletti told him,"Look, if we can progress this and get this going there is a likelihood that your bailwill be reinstated". On the other hand, Mr Bioletti told me in cross-examination thathe did not advise the appellant that if he resolved matters by agreeing values he wouldbe in a better position to make a bail application for him. Mr Bioletti said he did notfactor the bail question into it because, as counsel, he was of the view that the Courtwould in any event be unlikely to remand the appellant in custody through to Marchof the following year for a disputed facts hearing.[80] I agree with Mr Bioletti that the Court would have been unlikely to haveremanded the appellant in custody for such a lengthy period when the maximumsentence for the lead offence, to which the appellant had pleaded guilty, was only threeyears' imprisonment. The appellant had also not been remanded in custody when hehad pleaded guilty on 13 February 2018, eight months earlier. I therefore acceptMr Bioletti's evidence that he treated the question of bail separately from theagreement to values.[81] Again, even if Mr Bioletti had told the appellant that if he agreed values therewas a likelihood that his bail would be reinstated, which Mr Bioletti denies, that adviceappears to have been correct, as the appellant was bailed. There was, therefore, nocounsel error in that regard.[82] In his affidavit, the appellant also complains that he did not have theopportunity to review the disclosure relating to the case — in particular, the updatedstatement of Mr Bridgman, prior to agreeing values. This complaint was notdeveloped in counsel's submission but, in any event, does not appear to havesubstance.[83] Mr Bridgeman's first formal statement, dated 14 September 2018, was26 pages in length. He concluded that the value of the appellant's accounting practicewas most likely to have been between $89,000 and $295,000 and the value of his25 per cent share in Trinity Street Properties Ltd was most likely to have been worthbetween $166,000 and $332,000 at the date of his bankruptcy. Mr Bridgman'sstatement was served on the appellant on the same date. This was five weeks beforethe disputed facts hearing on 20 October 2018 and at a time when the appellant wason bail.[84] Mr Bridgman filed and served a second formal statement on 10 October 2018.It was 11 pages in length and revised his estimated value of the appellant's shares inTrinity Street Properties Ltd on the basis that the appellant's transfer of a 25 per centshareholding (from an original shareholding of 50 per cent) to his former wife mayhave been invalid. This led Mr Bridgman to revise his estimate of the value of theappellant's shareholding in Trinity Street Properties Ltd to have been between$183,962 and $344,610. Mr Bridgman's estimate of the value of the appellant'saccounting practice remained the same, as between $89,000 and $295,000.[85] The appellant received Mr Bridgman's second formal statement, in electronicform, two days before he was remanded in custody on 12 October 2018. I accept thathe had not printed it out prior to his Court appearance on 12 October 2018 andtherefore may not have been able to access it while on remand prior to the hearing on20 October 2018. However, the appellant was an accountant and was experienced invaluing small and medium enterprises, such as his accounting practice, and shares ina property owning company. Mr Bridgman's second formal statement was merely arevision of his first formal statement. It did not set out any radically new or differentapproach. The appellant was well aware of the case against him and, in particular, thevaluations put forward by the prosecutor prior to the hearing on 20 October 2018. Nodisadvantage to the appellant has been shown by the receipt of Mr Bridgman's secondformal statement by him eight days before the hearing on 20 October 2018.[86] Finally, I do not accept the appellant's evidence that he would not have agreedvalues if he was aware that he would be looking at a sentence of imprisonment, or ifhe was aware that a sentence of imprisonment was the most likely outcome. Theprosecutor had always sought a sentence of imprisonment and the appellant was wellaware of that. He knew that even if he agreed values the prosecutor would remainunchanged in approach. This evidence is also inconsistent with his acceptance that hewas only told home detention was a possibility and not a likelihood.[87] In conclusion, on the evidence before the Court, I do not believe thatMr Bioletti gave incorrect advice to the appellant about his likely sentence or bail. Iam satisfied that trial counsel error has not been established.Was the sentence manifestly excessive?[88] It is noteworthy that in previous cases, the Court has usually adopted a globalstarting point which encompasses all offending under the Insolvency Act. This wasnot the case here. The Judge split the offending into four separate groups: the propertyconcealed or fraudulently removed; the administrative offences; the extravagantspending; and managing a business. A starting point was set for the concealing orfraudulent removal of property. The Judge then uplifted the original starting point foreach of the other three groups before giving a discount for totality.[89] The Court of Appeal has, however, emphasised on a number of occasions thatwhat matters on appeal is the end sentence and not necessarily the process by whichthe end sentence is reached.31[90] Standing back, it is clear that the appellant deliberately set out to conceal orfraudulently remove what property he could from the Official Assignee. In evidencebefore me, when asked why he had transferred the shares in Trinity Street PropertiesLtd upon his adjudication, the appellant said he did that "simply for the purpose oftidiness". When asked to expand on the concept of tidiness, the appellant replied:I just wanted to put that, put that shareholding somewhere where it could justkind of rest forever without me having directly any involvement.[91] The appellant also knew full well of his obligation to co-operate with theOfficial Assignee, but he again deliberately failed to co-operate. He blamedcommunication issues. Through his plea of guilty to the charge of extravagantspending, the appellant accepted that he had materially contributed to, or increased theextent of, his insolvency. The appellant also continued to operate his accountingpractice when he was well aware he could not do so without the Official Assignee'sapproval. He never made such an application.31 See Simon France (ed) Adams on Criminal Law — Procedure (online looseleaf ed, ThomsonReuters) at [CPA250.05], citing Dellaway v R [2010] NZCA 100 at [22].[92] I am of the view that the most significant factor in considering the question ofwhether the sentence was manifestly excessive is the maximum penalty for the leadoffences of concealing and fraudulently removing property — a term of three years'imprisonment. In sentencing the appellant, the Judge adopted a starting point of28 months' imprisonment (83 per cent of the maximum sentence).[93] I agree with counsel for the appellant that the complexity and quantum of theoffending is not so high as to put it in the category of the most serious cases, which astarting point of 28 months' imprisonment represents. The property concealed totalled$78,048.49, some of which was derived from fees charged by the appellant throughhis accounting practice. The property fraudulently removed was his share of thefamily home and shares in a company through which he operated his one-manaccounting practice, the value of which he disputed but eventually agreed at the lowestend of the range assessed by the prosecution expert witness ($180,000 and $100,000).[94] There could have been greater values involved or more steps taken to concealor fraudulently remove property (such as moving it out of New Zealand). Theappellant's share of the family home has not been lost to the Official Assignee. I alsosee the assessment of the value of the appellant's accounting practice as an academicexercise. No steps were taken to realise what, if any, value it had. The OfficialAssignee was well aware that the appellant was operating his accounting practice, bothbefore and after adjudication. In some of his emails to the Official Assignee theappellant's email address would have the tag "CK Management and Tax Accountants".[95] Bearing in mind the sentences imposed in the Court of Appeal cases, to whichI have earlier referred, the starting point adopted for the charges of concealing andfraudulently removing property should have been no more than 18 months'imprisonment (half the maximum sentence).[96] I am also of the view that the uplift of the eight months' imprisonment on thecharge of managing a business without the consent of the Official Assignee was toohigh. As noted above, the Official Assignee was well aware that the appellant wascontinuing to operate his accounting practice after his adjudication. The appellant sayshe (misguidedly) continued to operate his practice to fulfil his obligation to clients andto ensure their successful transfer to another accountant. Of significance, no loss toclients has been demonstrated. The appellant also did not set up or involve himself ina new business without the Official Assignee's approval — he continued work asbefore.[97] The appellant's accounting practice was not a large business. It had minimalassets. It was, in effect, a one-man practice. In those circumstances, no more than afour month uplift was warranted.[98] With the reduction in the sentences to be imposed for concealing andfraudulently removing property, and for managing a business without the OfficialAssignee's consent, some adjustment is also required to the eight month reduction fortotality. A reduction for totality is still required but should be no more than fourmonths.Result[99] The appeal against sentence is allowed. The sentence of two years'imprisonment on the charge of concealing and fraudulently removing property isquashed and replaced with a sentence of 15 months' imprisonment. All othersentences are to remain the same — four months' cumulative imprisonment on theadministrative charges, the extravagant spending charge and the managing a businesscharge.[100] The total sentence of three years' imprisonment is therefore replaced with oneof two years and three months' imprisonment.________________________________Woolford J