TESSA FIONA GRANT v R [2018] NZCA 452

TESSA FIONA GRANT v R [2018] NZCA 452 [25 October 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA617/2017[2018] NZCA 452BETWEEN TESSA FIONA GRANTAppellantAND THE QUEENRespondentHearing: 28 August 2018Court: Miller, Mallon and Gendall JJCounsel: N P Chisnall for AppellantJ A Eng for RespondentJEM Lethbridge for SkyCity Entertainment Ltd, intervening withleaveJudgment: 25 October 2018 at 2.00 pmJUDGMENT OF THE COURTA The application to adduce further evidence on appeal is granted.B The appeal is allowed. The sentences are quashed. Concurrent sentences ofsix years' imprisonment are substituted. The sentences remain subject to aminimum period of imprisonment of 50 per cent.C The suppression order made in this Court on 15 June 2018 is discharged.____________________________________________________________________REASONS OF THE COURT(Given by Mallon J)Introduction[1] Tessa Grant stole over $2.75 million from her two employers,SkyCity Entertainment Group Ltd and Waikato Diocesan School for Girls.She pleaded guilty to the charges brought against her.1 She was sentenced inthe District Court by Judge Connell to seven years and eight months' imprisonmentwith a 50 per cent minimum period of imprisonment.2 She appeals her sentence.[2] Ms Grant contends her sentence should have been reduced to take into accountthe substantial recovery by SkyCity and the full recovery by the school of its directfinancial losses. She says that, because information about a settlement with SkyCitywas treated as confidential, it was not made available to the District Court Judge, andthis meant he was unaware Ms Grant had made substantial reparation to SkyCity.She also contends she received an inadequate reduction for her guilty pleas.[3] If her sentence is reduced for these matters, Ms Grant also seeks a reduction inthe percentage of her minimum period of imprisonment.Circumstances of the offending[4] The SkyCity offending took place between 22 December 2008 and24 February 2014 when Ms Grant was the finance manager and on occasionsthe general manager at SkyCity's Hamilton operation. Her fraudulent activityinvolved issuing cheques drawn on a SkyCity account to pay personal expenses,falsifying invoices and withdrawing unauthorised petty cash, and dishonestlyaccessing the computer. The amount fraudulently taken was $1,980,922.01. Ms Grant1 Against SkyCity she pleaded guilty to a representative charge of dishonestly using a documentwith intent to obtain a pecuniary advantage (Crimes Act 1961, s 228(1)(b)); a representativecharge of theft in a special relationship (ss 220 and 223(a)); and a charge of accessing a computersystem dishonestly and without claim of right (s 249(1)). Against Waikato Diocesan School shepleaded guilty to three charges of using a forged document (s 257(1)(a)) and four charges ofdishonestly using the document (ss 228(1)(b) and 257(1)(a)).2 R v Grant [2017] NZDC 20420 [Sentencing notes].used some of the misappropriated funds to construct a horse arena at her property($425,456.91), pay equestrian-related expenses ($476,715.72), and operate hercredit card.[5] Ms Grant's offending remained undiscovered when she left SkyCity inJuly 2014. At this time she commenced employment at Waikato Diocesan School forGirls as the school's commercial manager. She resigned from this position inSeptember 2015 when an employment investigation into her use of the school creditcard and other irregularities was underway. A subsequent police investigationestablished she had misappropriated school funds totalling $795,000.[6] Her offending against the school covered the period from December 2014 untilApril 2015. It involved falsifying board minutes to approve unauthorised payments;falsifying invoices and making resulting payments to herself (either by diverting thepayments to her bank account or by taking the sums in cash); unauthorised spendingon her school credit card; and using cheques drawn on the school account to pay herpersonal expenses. She applied some of these misappropriated funds to purchase aproperty in Hamilton (approximately $900,000), to make progress payments on ahorse coach and truck chassis she had agreed to purchase ($155,000), to buyequestrian-related gear ($150,000), and to buy jewellery ($55,850).[7] Ms Grant was charged with offending against the school in December 2015.At this time she paid full reparation to the school, including interest and costs, anamount totalling $902,521.54. She pleaded guilty to the charges relating to thisoffending on 6 January 2016.[8] SkyCity commenced an internal investigation following an approach from acontractor whose name had been used by Ms Grant to falsify invoices to obtain fundsfrom the school. That contractor had carried out work for SkyCity when Ms Grantwas an employee. SkyCity's internal investigation led to the discovery ofthe offending against it. Ms Grant first appeared on the SkyCity charges on6 April 2016. She pleaded guilty on 23 June 2017, which was three weeks before hertrial on those charges.[9] She was sentenced on all the charges on 11 September 2017.District Court sentencing[10] The District Court Judge decided on a totality-adjusted starting point for bothsets of offending of eight and a half years' imprisonment.3 In doing so, the Judgecorrectly noted that culpability was to be assessed with reference to the factorsdescribed in Varjan v R.4 Those factors are the nature of the offending, its magnitudeand sophistication; the type, circumstances and number of victims; the motivation forthe offending; the amounts involved; the losses; the period over which the offendingoccurred; the seriousness of the breach of trust involved; and the impact on thevictims.5[11] The Judge regarded Esau v R and R v Robinson as providing appropriatecomparators.6 He noted that in those cases amounts of $1.1 million and $2.6 millionrespectively were stolen from the defendant's employer. Starting points of six yearsand six months' and seven years and six months' imprisonment respectively wereadopted. He derived his starting point by taking seven years for the SkyCity offendingand uplifting that by one and a half years' for the school offending, having regard tototality.7[12] The Judge declined to discount that starting point for the reparation paid to theschool. He did so because he inferred that Ms Grant had paid the school with moneystolen from SkyCity. He explained this as follows:[37] I cannot accept that there should be any credit or discount forreparation paid. The point made by Crown counsel Mr Douch is correct, thatthe reparation paid to Waikato Diocesan School was in the main funded frommoneys taken from Sky City which seem wrong in principle in my view toallow some reward for theft and repaying Diocesan School from funds stolenfrom Sky City.3 At [36].4 At [30], citing Varjan v R CA97/03, 26 June 2003.5 Varjan, above n 4, at [22].6 Sentencing notes, above n 2, at [33], citing Esau v R [2014] NZHC 997; and R v Robinson[2015] NZHC 1673.7 Sentencing notes, above n 2, at [35]–[36].[13] The Judge made no mention of any recovery by SkyCity of its losses. He didnot order reparation. SkyCity's victim impact statement dated August 2017 referredto the time and financial resources it had dedicated to "discovery and investigation ofthe fraud" but made no reference to any recovery. The summary of facts recorded thatSkyCity was not seeking reparation "given ongoing civil prosecution" by it.A psychologist's report before the Judge included a statement that a "substantialsettlement has been made to SkyCity". The prosecutor referred to the repayment tothe school and said "[n]o such repayment has been made to SkyCity Limited by thedefendant". Submissions on behalf of Ms Grant advised the Judge that civil actionhad been taken against her and other defendants and that: some aspects against others have been settled confidentially. Counselunderstands Ms Grant provided all of her assets and possessions, bar herclothing, to SkyCity.[14] The Judge declined to allow any discount for remorse. He applied a discountof one and a half months from the one and a half year term of imprisonment for theschool offending for the early guilty plea to that offending. He applied an eight and ahalf months' discount on the term for the Sky City offending for the later guilty pleato that offending. This brought the sentence down to seven years and eight months'imprisonment.8SkyCity's civil recovery[15] When sentencing Ms Grant, the Judge was not informed of the details of thesettlement that SkyCity had received. The police had a copy of the settlementagreement; but Mr Eng, who appeared before us for the Crown, understood thatthe prosecutor was not aware of the details (though Mr Eng has not been able toconfirm this). We do not know why Ms Grant's counsel in the District Court did notobtain details of the settlement either.[16] Mr Chisnall, Ms Grant's counsel on this appeal, sought to obtain details ofthe settlement for the purposes of the appeal. He first approached the Crown toenquire with SkyCity whether it had recovered funds and, if it had, the quantity of that8 At [39].recovery. The Crown enquired with SkyCity which declined to provide theinformation on the basis it was confidential. Mr Chisnall sought a production orderfrom this Court.9 The Crown's position was that SkyCity's recovery in a confidentialcivil recovery from a third party was irrelevant to the criminal proceeding. We agreewith Mr Chisnall that the Crown was wrong about this. It ought to have taken stepsto facilitate the information being placed before this Court.10[17] It then took some time and encouragement from the Court for information fromSkyCity to be put before the Court.11 Initially a joint memorandum from SkyCity andMs Grant's father (Mr Grant) and his company advised the Court that they had reacheda confidential settlement agreement and this did not settle SkyCity's claim againstMs Grant. It also advised that they did not consent to disclosure of the settlementagreement because of the confidentiality clause in that agreement. Shortly thereafterMr Grant and his counsel advised they abided the Court's decision and would complywith any orders but, absent a court order, they were bound by the confidentialityagreement.[18] SkyCity's counsel (like the Crown) seemed to misapprehend the relevance ofthe information. More importantly, counsel seemed not to appreciate thatconfidentiality affords no justification for withholding information from a sentencingcourt, which is not bound by a private agreement between SkyCity and a third partythat their settlement be kept confidential. The settlement agreement was eventuallyprovided in full and, at counsel's request, confidentiality orders were made bythis Court on 15 June 2018 over that agreement.12[19] SkyCity also produced an affidavit which annexed multiple documents relatingto the civil proceedings. The affidavit did not provide any narrative explaining them.Having reviewed them, we have been able to discern the following:9 Pursuant to the Criminal Procedure Act 2011, s 335.10 Victims' Rights Act 2002, ss 17 and 17AB. Had the relevance of the information been explainedto SkyCity together with the Court's powers to compel disclosure under the Criminal ProcedureAct we expect the information would have been provided promptly. In any event, as we cometo, the recovery was not from a third party in this case.11 This Court issued a number of minutes in order to obtain the information. Delays in its provisionmeant that the scheduled hearing of the appeal was adjourned.12 Grant v R CA617/2017, 15 June 2018 (Minute of Cooper J).(a) On 29 January 2016 SkyCity obtained without notice freezing ordersover assets of Ms Grant, a company associated with Ms Grant, MrGrant, a company associated with Mr Grant, and another third partywho co-owned a horse with Ms Grant. The orders included theappointment of a receiver (KordaMentha) to trace the assets.(b) Mr Grant provided an affidavit in connection with the freezing ordersapplication. He explained that he was unaware of Ms Grant's offendingand, when the offending against the school was discovered, he arrangedthrough his lawyer to sell three properties which Ms Grant owned.These were sufficient to repay the school including principal andinterest. Mr Grant's company also took over a $800,000 mortgage andan obligation for $400,000 of improvements to a property. One of thehorse trucks owned by Ms Grant was sold for $205,000 and, afterdeduction of $55,000 which Ms Grant owed to her father, the balanceof the proceeds were paid to Mr Grant's company.(c) On 11 February 2016, the freezing orders were continued againstMs Grant and her father and the two associated companies only.They were limited to assets with an aggregate value of $1,266,000.The High Court orders included orders supressing any commerciallysensitive information concerning Mr Grant until further order ofthe court.(d) On 4 August 2016 SkyCity entered into a settlement agreement withMr Grant and his company. Pursuant to this settlement Mr Grant andhis company agreed to pay SkyCity $1.4 million. Once payment wasmade the freezing orders against them would be discharged.The parties agreed this settlement had "no effect on the civil or criminalclaim" against Ms Grant. They further agreed:13The parties agree that the terms of this settlement are confidentialas between the parties and will not be disclosed (except as to the13 It also set out the terms on which the parties could advise third parties about the settlement.fact of settlement) other than for the purpose of obtaining legaladvice or otherwise as required by the operation of law.(e) On 16 March 2018 SkyCity discontinued its civil claim againstMs Grant with no issue as to costs. The notice of discontinuanceexplained to the Court that this was because continuing the claim wouldserve no purpose given that Ms Grant was now serving a sentence ofimprisonment and had no assets.[20] Accordingly, it appears that SkyCity recovered not less than $1.4 million.The total amount referred to in the charges against Ms Grant for offending againstSkyCity was $1,980,922.01.[21] We accept Mr Eng's submission that this is an unusual case. Ordinarilythe offender would be in a position to tell counsel what had been repaid. It is not clearwhy neither side provided details of the SkyCity settlement to the District Court Judge.On the information before us it appears that those involved either had a misguidedbelief that the confidentiality clause in the settlement agreement prevented itsdisclosure or perhaps that it was irrelevant because SkyCity received the money incivil proceedings from a third party. Neither of those matters made the settlementirrelevant.[22] In fact, it is now apparent that the settlement was sourced from Ms Grant'sassets. Counsel for SkyCity, Ms Lethbridge, appeared at the appeal hearing.14She advised that most of the $1.4 million came from a property which Ms Grant hadpurchased and which had been transferred to Mr Grant's company.15 The other sourceof funds was the sale of a horse float.16 Counsel said that other items (such asjewellery) had been recovered from Ms Grant but the costs associated with SkyCity's14 This was pursuant to leave granted by this Court when information was being sought about itsrecovery of funds. This was unusual but we heard from counsel because we remained unclearabout the source of the funds recovered and why SkyCity wished to maintain confidentialityover the settlement.15 This appears to be the property over which Mr Grant assumed the mortgage and otherobligations.16 At the hearing, SkyCity's counsel offered to provide a schedule of SkyCity's losses, includingits costs in securing the recovery of the $1.4 million. However, SkyCity had the opportunity toprovide these details before this hearing. In any event, more precision about this will not havea material effect on the outcome of this appeal.civil proceedings meant that its total net recovery was less than the $1.4 million.Counsel continued to contend the information was confidential pursuant to thesettlement agreement and orders of the High court. But for that agreement andthe orders, counsel provided no basis for maintaining a suppression order concerningthe sums SkyCity recovered.[23] We are satisfied that the principle of open justice must prevail. We note thatthe High Court orders do not prevent the disclosure of any of the information inthis judgment. That is because this judgment does not disclose commercially sensitiveinformation concerning Mr Grant, who abides the decision of this Court concerningthe information disclosed. The suppression orders made in this Court on 15 June 2018are discharged as, now that SkyCity's position is clear, there is no basis for them.Our assessment of the appeal groundsThe recoveries made by SkyCity and the school[24] Under s 10 of the Sentencing Act 2002, when sentencing an offender the court"must take into account" any offer of amends by the offender; "the response ofthe offender or the offender's family" to the offending; and "any measures taken" by"the offender or the family" to "make compensation to any victim".17 The paymentsto the school and SkyCity fall within s 10 even though civil proceedings were initiatedto obtain them.18[25] Where an offer of amends is made by the offender, its potential relevance tosentencing is threefold: first, it may be an indication of remorse; secondly, it may gosome way to remedying the harm; and thirdly it may constitute a penalty tothe offender.19 Where compensation has been made by a family member it is thesecond of these matters which is likely to be at the forefront but this will depend onthe circumstances.17 Sentencing Act 2002, s 10(1). Section 10(2) of that Act provides that, in deciding to what extentany offer of amends should be taken into account, the court "must take into account" whetherthe offer was genuine and capable of fulfilment, and whether it has been accepted by the victimas mitigating the wrong.18 Rosenberg v R [2015] NZCA 97 at [20]–[21].19 M v R [2008] NZCA 112 at [31].[26] When compensation is paid for financial losses caused by dishonestyoffending, the victim's losses are restored (fully or partly as the case may be).As noted above, the extent of a victim's losses is a relevant factor when assessing thestarting point for the offending. Depending on the circumstances it may also be amitigating factor as a tangible sign of remorse. As explained by this Court inPatterson v R, this may depend at least partly on whether the payment was involuntaryor voluntary:20Perhaps the most logical approach is to acknowledge "involuntary" recoveryof money stolen in the starting point analysis and "voluntary" reparation as amitigating factor — taking care, of course, not to double count. We havealready indicated that fraud offending where no recovery is achieved is "moreserious" than fraud offending with complete recovery, if only because in thelatter case the victims' loss is transitory and not permanent. The offendershould get some credit for that in the starting point adopted, but not much.Not much because the offender's culpability is not significantly reduced: heor she is still a fraudster and would not have voluntarily returned the moneyor thing stolen but for being caught. [42] "Voluntary" reparation is quite different. Where an offender exhibitsgenuine remorse and has done his or her best to atone financially for the fraud,whether by selling assets or borrowing and promising to make recompense byinstalments from future earnings, credit is appropriate as a mitigating factor.[27] Patterson was a case of involuntary recovery. Mr Patterson fraudulently stole$3.4 million. When the police executed search warrants at his home they recoveredover $1.2 million in cash and gold. The balance was ultimately recovered by the policeunder the Proceeds of Crime Act 1991, but this was no thanks to Mr Patterson. He "didhis best to prevent recovery of money he had squirreled away in overseas accounts",21and was "still attempting just prior to sentencing to defeat the authorities' locating andseizing his ill-gotten assets overseas".22 This Court was satisfied the sentencingJudge's starting point had appropriately taken into account the involuntary recovery.23[28] In this case Mr Chisnall contended the repayment to the school could beclassified as voluntary whereas the funds recovered by SkyCity were probablyinvoluntary. In our view the involuntary and voluntary distinction made in Pattersondoes not neatly the fit the circumstances here. The school and SkyCity took immediate20 Patterson v R [2008] NZCA 75 at [41]–[42].21 At [21].22 At [39].23 At [22]–[23].steps to protect Ms Grant's assets from dissipation. In that sense the recovery theyobtained was involuntary. On the other hand, Ms Grant and her father were involvedin facilitating that recovery. Ms Grant provided her father with a power of attorneyand he, on her behalf, attended to the return of funds to them. It is now clear that hedid so from assets held by Ms Grant which were funded by her fraud. There is noevidence either she or Mr Grant actively resisted the return of funds to her victim.There is evidence they cooperated. We grant leave for this evidence to be adduced onthis appeal given the unusual course of events through which Ms Grant's counsel andthis Court were eventually apprised of the settlement with SkyCity.24[29] We consider the full repayment to the school and the substantial recovery madeby SkyCity should have been taken into account when the Judge determinedthe starting point. The Judge did not explain why a substantial settlement received bySkyCity was not relevant although, in fairness to the Judge, he did not have the detailsof that settlement. In the school's case he did not do so because he saw this asrewarding Ms Grant for her theft from SkyCity. That may not have been entirelycorrect on the facts as Ms Grant had also accumulated assets from her offendingagainst the school. But in any case the source of the funds was irrelevant to the factthat it meant the school's financial losses were transitory only, and this was relevantwhen setting the starting point.[30] We also note that the settlement Ms Grant's father and his company reacheddoes not raise issues of "cheque book justice" whereby offenders who can call uponwealthy family or friends look to have their sentence reduced. When the Crown madethat submission it did not have details of how the settlement came about. It is nowapparent that the father's settlement with SkyCity, which substantially restored themoney stolen from it, came from Ms Grant's assets which she had financed from herfraud.24 An affidavit from Ms Grant in this appeal deposes to meeting with KordaMentha and assistingit with tracing the funds. Ms Grant also deposes to providing jewellery to the values of around$56,000 to KordaMentha. SkyCity's counsel considered this affidavit to be misleading andwished to have the opportunity to respond to it. We have decided not to provide SkyCity with afurther opportunity to respond to Ms Grant's affidavit because we consider the full details do notmaterially assist.[31] Of the two cases the Judge relied on, given SkyCity's substantial recovery andthe different nature and number of the victims, we consider the SkyCity offending wasmore similar to Esau than Robinson.25 On that basis we consider a starting point ofno more than six years should have been adopted in relation to the SkyCityoffending.26 The uplift for the school offending already contained a substantial totalityreduction. We therefore consider it does not require further adjustment in recognitionof the full recovery the school made when the lead sentence has now been adjusted.The materially aggravating features of the offending were its extensive and sustainednature, the breach of trust it involved and that Ms Grant's fraudulent activity beganvery soon after her departure from SkyCity and her new employment with the school.A total starting point of seven and a half years' imprisonment more appropriatelyreflects the overall culpability of the offending as compared with the two casesthe Judge relied on.[32] A small discount for cooperating with the recovery was potentially available.However because of the school's and SkyCity's immediate steps to protect theirposition, it does not seem that any significant effort on Ms Grant's part was required.The recovery was materially assisted by her father and as such was not a tangibleexpression of her remorse. As the District Court Judge said, sincere remorse was notdemonstrated in any of the material before him. Rather Ms Grant had sought tominimise and justify her offending. In these circumstances we consider there was noerror by the Judge in declining a credit for cooperation and remorse.25 In Esau, above n 6, the sentence imposed in the District Court was appealed to the High Court.In upholding the sentence, the Judge commented that the starting point was "at the high end ofthe scale" (at [18] and see also [36]). The Judge noted that, in contrast with another case wheresignificant recovery of the stolen money had been made, there was no money recovered to permitany reparation to be made (at [30] and [34]). In Robinson, above n 6, a total of nearly $2.7million was misappropriated of which around $400,000 was recovered. The offending involved13 separate (mostly elderly) victims, 11 of whom suffered serious financial losses from whichthey were unlikely to ever recover.26 See for example Singh v Serious Fraud Office HC Auckland CRI-2008-404-361, 4 March 2009,referred to in Esau, above n 6, where six years' imprisonment was imposed for offendinginvolving fraud of about $1.3 million over a period of 14 months but reparation brought the lossdown to $600,000. See also Rosenberg v R, above n 18, where a starting point of five and a halfyears' imprisonment was regarded by this Court at [35] as "very much at the bottom end of theacceptable range" where a shortfall from a sustained fraud was reduced from $9.7 million toabout half of that because of a settlement made by the defendant.The guilty plea discount[33] Because of the way the Judge approached the guilty plea discounts, the overalldiscount amounted to 10 per cent of Ms Grant's final sentence. We agree with hercounsel that this discount gave insufficient recognition to the early guilty plea forthe school offending and the fact that a three week trial for the SkyCity offending wasavoided. The guilty pleas involved an agreement with the Crown to replace 52 chargeswith two representative charges and one charge of accessing a computer systemdishonestly without claim of right, and to dismiss the remaining charges. That mayhave been to Ms Grant's advantage but it was presumably agreed to by the Crown inlight of the strengths of its case on the charges dismissed. We agree with Mr Chisnallthat a global discount of 20 per cent from the starting point more appropriately reflectsthe timing and significance of the guilty pleas on the two sets of charges.Overall sentence[34] The result from these two adjustments is to reduce Ms Grant's end sentencefrom seven years and eight months to six years' imprisonment.Minimum period of imprisonment[35] It does not follow that, because we have reduced the sentence, the percentageof the minimum period of imprisonment should also be reduced. The 50 per centminimum was justified by the need to denounce and deter offending of this kind.As the lead sentence has reduced from seven to six years, the minimum period willreduce in length, if not by percentage. That is a sufficient adjustment to the minimumperiod for the reduction in sentence.Result[36] The application to adduce further evidence on appeal is granted.[37] The appeal is allowed. The sentences are quashed. Concurrent sentences ofsix years' imprisonment are substituted. The sentences remain subject to a minimumperiod of imprisonment of 50 per cent.[38] The suppression order made in this Court on 15 June 2018 is discharged.Solicitors:Crown Law Office, Wellington for RespondentLowndes, Auckland for SkyCity Entertainment Ltd, intervening with leave