IN THE Court of appeal OF new Zealand

I TE KŌTI PĪRA O AOTEAROA	
 CA281/2020
 [2020] NZCA 456

	
BETWEEN	
HEATHER COLLEEN MCHUGH
Appellant	
	
AND	
THE QUEEN
Respondent	

Hearing:	
25 August 2020	

Court:	
Courtney, Wylie and Muir JJ	

Counsel:	
M J Taylor-Cyphers for the Appellant
B Tantrum and J T Parry for the Respondent	

Judgment:	
29 September 2020 at 10 am	

JUDGMENT OF THE COURT
A	The appeal against conviction is dismissed.
B	The appeal against sentence is dismissed.
____________________________________________________________________

REASONS OF THE COURT

(Given by Muir J)
Introduction
[1]	Ms McHugh appeals her conviction in respect of one of 11 charges of false accounting of which she was found guilty following a jury trial.  Simultaneously she was convicted of 24 charges of theft by a person in a special relationship.  She also appeals the sentence of two years and nine months’ imprisonment imposed in respect of all convictions.
Background
[2]	Ms McHugh was employed by the complainant Vertech Limited in an office manager role in December 2015.  The role included administrative and human resource functions, budgetary management, processing payments to creditors and staff of the business, purchasing goods for the business and managing the payroll.  To facilitate these functions, she was given access to the complainant’s bank account (to make authorised payments to the complainant’s credit card), iPayroll and Xero accounts and its online accounts with Countdown and Warehouse Stationery.
[3]	Between January 2016 and June 2017, Ms McHugh fraudulently misappropriated company funds by accessing the complainant’s accounting platforms and making unauthorised payments and purchases, including payments to her personal bank account and a creditor.  Her dishonesty included falsely claiming 620.95 hours in overtime, adding 48 non-taxable allowances to her salary and paying a total of $5,864.40 to her son (who had previously worked for the company), after his cessation of employment.
[4]	The total value of her defalcation was $53,743.92.  In addition, the complainant incurred investigatory costs of $12,191.89.  Its overall loss was therefore $65,935.81.  None of this sum has been recovered.
The conviction appeal 
Preliminaries
[5]	Ms McHugh appeals her conviction on Charge 10.  This was in terms:
That Heather Colleen McHugh on or around 26 May 2017, at Auckland, with intent to deceive Vertech Limited, made a false entry in the Xero accounting system, the electronic ledger system for Vertech Limited.
Particulars: By creating an invoice, and coded a payment as Fuji Xerox.  
[6]	The charge was under s 260(a) of the Crimes Act 1961 which provides:
260	False accounting
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—
	(a)	makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes …
	…
[7]	Ms McHugh’s appeal falls to be determined under Part 6 of the Criminal Procedure Act 2011.  Her notice of appeal against conviction includes multiple grounds but not the singular point now advanced in submissions.
[8]	The point now taken is that the conviction in respect of Charge 10 represents a miscarriage of justice and/or that the jury’s verdict in that respect was unreasonable because the Crown never established that Ms McHugh “create[d] [the relevant invoice], and coded a payment as Fuji Xerox”.
The argument and the documents relied on
[9]	In her written submissions Ms Taylor-Cyphers focused on the fact that the Crown had not produced an “invoice”.  She accepted that the complainant’s Xero accounting system identified an invoice from Fuji Xerox Printers for the month of May 2017 and in the amount of $931.15.  She accepted also that on 26 May 2017 a payment in that amount was made to Ms McHugh’s personal account, albeit identified in the company’s bulk payments as having been paid to “Fuji Xerox Printers”.  She noted that the payment itself was the subject of Charge 11 (intentional payment of property under her control other than in accordance with the requirements imposed on her).  She submitted however, that absent production of the invoice itself, no reasonable jury could convict Ms McHugh of making or causing to be made any false entry in terms of s 260(a).
[10]	In response, the Crown’s written submissions correctly identified that proof of a stand-alone invoice was not a necessary ingredient of the charge and that all the Crown was required to prove was that the invoice had been created in the Xero system.
[11]	In oral argument Ms Taylor-Cyphers’ position attempted to adapt accordingly.  She pointed to documents which showed that the “invoice” from Fuji Xerox identified in the complainant’s records was stated to be “generated from a repeating transaction”.  She submitted that no reasonable jury could conclude that Ms McHugh had created the transaction in the company’s accounts, or alternatively, that a miscarriage of justice had occurred.  
[12]	In attempting to meet that argument the Crown referred to Ms McHugh’s evidence under cross-examination in terms of her role in coding all transactions.  Counsel emphasised that Ms McHugh had never attempted to minimise her role, and that her defence was based solely on the proposition that she had been instructed by her employer to make the false entries (and otherwise unauthorised purchases) in lieu of a salary increase.  Such defence was rejected by the jury.  
[13]	The relevant documentary material before the jury included: 
(a)	a payment summary prepared by the prosecution for the jury’s ease of reference, identifying the following:

Payee Name	Date	Amount paid 	Description on 
payment
	Xero entry	Xero coding	Amount excl. GST	
Fuji Xerox Printers	26.05.17	$931.15	Vertech IT		INV######
Page Pack May 2017
	$809.73	
(b)	Bulk payment details showing individual payments authorised by Ms McHugh on 26 May 2017 and including an amount to Fuji Xerox Printers for the sum of $931.15 together with details of the bank account into which the payment was made (her own).
(c)	Associated records from within the Xero accounting system collated in a document which provided:
Purchases  Bills 
Bill INV ####### Page Pack May 2017
…

This bill was generated from a repeating transaction.  The original repeating transaction has been deleted.

From Fuji Xerox Printers P O Box 6238
Frenchs Forest DC
2086
NSW
AUSTRALIA Edit Address
Date 7 May 2017
Due Date June 2017
Reference INV ####### Page Pack May 2017
Total 931.15
Amounts are Tax Exclusive
	…

	Subtotal 809.73
	Total GST 15%121.46
	Rounding (0.04)
	TOTAL	 931.15

	…

	HISTORY & NOTES	

	…

Changes	Date	User	Details	
…
				
Paid	30 May 2017
12.00 pm	Heather 
Stephens	Payment made to Fuji Xerox Printers on 26 May 2017 for 931.15.  This bill has been fully paid.
	
Approved	19 May
2017
9.28 am	Heather Stephens	INV####### Page Pack May 2017 from Fuji Xerox Printers for 931.15.
	
Created	7 May 2017
12.01 am	System
Generated 	Created using repeating schedule.	

[14]	Ms Taylor-Cyphers says that, on its face, the third of these documents indicates that the invoice coded into the system dated 7 May 2017, with a due date of payment of 6 June 2017, was a recurrent invoice which Ms McHugh may have “approved” but which she did not “create”.  We note that the particulars of the charge against her do not allege “concurrence” in the making of any false entry, but rather “creation”.
Discussion
[15]	We agree that the document referred to at [13(c)] above contains some support for MsTaylor-Cyphers’ submission.  However, in the context of the evidence as a whole we are satisfied that the jury could reasonably have come to the conclusion it did.  Nor do we consider there to have been any miscarriage of justice consequent on her conviction.  In particular we refer to the following exchanges which occurred during Ms McHugh’s cross-examination:
Q	… So, in general, the transactions that have been evidenced, you’re happy that they were made?
A	Correct.
Q	And that the coding that is set out in the documents we’ve seen is the
coding from the system?
A	If the coding was that then yes.
Q	So you're happy that the payments that the Crown have said have gone
into your accounts have actually gone into your accounts?
A	Yes, correct.
Q	You agree that you were the one who carried out all of these
transactions?
A	Yes.
Q	And what you dispute is why you carried out these transactions?
A	Yes.
…
Q	You were the person who made these payments into your account,
correct?
A	That's correct. With Daniel’s approval.
Q	And you’ve entered the coding?
A	With Daniel’s approval.
[16]	Ms McHugh’s position was therefore that, to the extent any of the charges faced by her involved coding, this was undertaken by her.  Although the evidence was that there was an existing business relationship between Vertech and Fuji Xerox, it did not involve a fixed monthly payment and, in respect of the payment in question, no invoice number was coded, consistent with the account for $931.15 having never been legitimately raised.  In any event, the invoice was shown (or coded) in Xero as paid to Fuji Xerox when it was not.  On her own evidence the Ms McHugh was responsible.  This was a “false entry in any book or account”.  The ingredients of the charge are accordingly made out.
The sentence appeal
The District Court sentence
[17]	Judge Dawson considered that, in terms of s 7(1) of the Sentencing Act 2002, the requirement to hold the offender accountable for the harm done to the victim was the sentencing purpose most relevantly engaged.  Having regard to the duration of the offending and sum stolen he considered the offending to be of medium gravity but high culpability.  He emphasised the very significant impact on the complainant and in particular that the company had, as a result, fallen into default with the Inland Revenue Department (IRD), attracting penalties and interest.  He noted that the offending had a considerable financial impact on the proprietor of the business who had been required to reduce personal drawings and that it had likewise affected him psychologically.  He regarded the level of premeditation as high in that it was “repetitive offending of over 200 unauthorised transactions and it continued over a 15 month period”.  He noted an absence of remorse, but that the defendant was assessed as being of low to medium risk of re-offending given her minimal previous history of dishonesty.
[18]	He noted an offer to pay reparation but concluded that the defendant had “no foreseeable possibility of paying anything”.  He concluded that her actions were cynical, had nearly driven her employer to the point of liquidation and that, having regard to the many cases cited to him, an appropriate starting point was three years’ imprisonment.  No uplift was applied on account of Ms McHugh’s previous offending and a deduction of three months (8.3%) was made on account of her health.
[19]	The final sentence was therefore two years and nine months’ imprisonment.
Submissions
[20]	Ms McHugh submits that the sentence was manifestly excessive because:
(a)	the starting point was too high;
(b)	(a related submission) the sentence was inconsistent with marginally higher sentences in case involving “loss in the millions”; and 
(c)	insufficient consideration was given to the defendant’s personal circumstances and the option of a short term of imprisonment and/or a community-based sentence.
[21]	Ms Taylor-Cyphers acknowledged that the starting point was appropriately assessed having regard to the defendant’s culpability which in turn involved an assessment of motivation for the offending, the amounts involved, the loss caused, the period over which the offending took place, the seriousness of the breach of trust involved and the impact on the victims of the offending.  
[22]	She submitted that the motivation was needs-based as Ms McHugh was the single mother of a teenage son with mental health issues who was unable to work.  She acknowledged the quantifiable losses attributable to the offending as being $65,935.81.  She submitted that although Ms McHugh was in a position of trust “many of the transactions could not have threatened the trust and competence of the employer because of the circumstances”.  That comment appears to invoke the ‘behest of employer’ defence which the jury clearly rejected.  She questioned the extent to which the company’s tax problems could be attributed to the offending saying that they “cannot sensibly be attributed to Ms McHugh in isolation”.
[23]	In support of her ‘comparability’ argument, Ms Taylor-Cyphers has referred to Serious Fraud Office v Ellis, R v Davis and R v Colosimo.  In Ellis a starting point of five years’ imprisonment was adopted for deception charges relating to overcharging by senior executives at Wilson Parking over a period of two years resulting in losses of $460,000.  In Davis a starting point of four years’ imprisonment was upheld for theft of around $280,000 by an office manager over a five-year period.  Colosimo involved forgery of a document to show inflated business profits resulting in a loss to the purchaser of the business of $433,000.  A starting point of three years was upheld.
[24]	In the context of these cases Ms Taylor-Cyphers suggested a starting point of two years and two months to two years and four months would have been appropriate.  
[25]	From that starting point she submitted that a further “modest” deduction should have been made on account of the fact that Ms McHugh’s son lived with her, is supported by her and cannot work due to his mental health issues.  She also submitted that a “small discount” should have been made on account of Ms McHugh’s offer of reparation — despite her current circumstances — because there was a reasonable prospect of her being able to obtain employment on her release from custody.
[26]	In response, the Crown emphasised the quantum of the complainant’s loss and the impact which the thefts have had on its business (including threatened liquidation by IRD).  The Crown described this fraud as “highly premeditated and sophisticated” albeit “hidden in plain sight”.  It submitted the unauthorised payments were sophisticated in that they occurred through the use of different accounting or online platforms, most of which were accompanied by false entries in Xero.  It argued that Ms McHugh’s motivations were personal gain and that the offending was not needs‑based having regard to Ms McHugh’s legitimate salary of $67,000 and the fact that among the items funded by her dishonesty were a suit for her son’s school ball and leisure items.  The Crown emphasised that there was a gross breach of trust because her employer was a small company and the offender was entrusted with almost complete access and control over its finances.
[27]	Against this background the Crown submitted that the starting point was well within range, particularly having regard to what it submitted are the most relevant comparable authorities.  Counsel further submitted that no discount was appropriate on account of the offer of reparation, which needed to have some reasonable prospect of fulfilment before being relevantly taken into account.  Given the fact that the defendant had never expressed remorse, maintained her innocence and had no current ability to pay any sum at all, the Crown effectively invited the conclusion that the offer was hollow.
[28]	Nor, submitted Mr Parry, was there any error in the District Court Judge declining a discount on account of the circumstances involving Ms McHugh’s son.  Although Ms McHugh had advised the pre-sentence report writer that her son was unable to work, the Crown pointed to evidence, adduced at trial, demonstrating that the son had, at least in the past, been capable of doing so.
Discussion
[29]	This Court must allow the appeal against sentence if satisfied that, for any reason, there is an error in the sentence imposed and a different sentence is appropriate.  In the absence of an identifiable error, the appeal must be dismissed.  As this Court has repeatedly emphasised, where a sentence is within the range which can be justified by accepted sentencing principles, an appellate court will typically not intervene.
[30]	This was prolonged, serious, sophisticated and multi-faceted offending against a small company and had very significant consequences.  The breach of trust was serious given the level of autonomy possessed by Ms McHugh.  Her offending started almost immediately after commencement of employment.  It continued unabated until discovered.  The consequences continue to reverberate in terms of ongoing cashflow problems within the company, consequent default in its IRD obligations and requirements to reduce staff.  They also reverberate in terms of the personal stress caused to the company’s proprietor.  
[31]	Ultimately the starting point for dishonesty offending is dictated by an assessment of culpability.  In R v Varjan this Court held that the circumstances and culpability of offences of dishonesty vary widely but that: 
[22]	Culpability is to be assessed by reference to the circumstances and such factors as the nature of the offending, its magnitude and sophistication; the type, circumstances and number of the victims; the motivation for the offending; the amounts involved; the losses; the period over which the offending occurred; the seriousness of breaches of trust involved; and the  impact on victims.
[32]	We agree with the Crown that, having regard to these criteria, the Judge’s starting point was within range.  The amount of the loss was significant in the context of a small company’s operations.  The offending was indeed premeditated and sophisticated involving multiple accounting platforms and was not, at least in some identified respects, needs-based.  It also continued for an extended period.  
[33]	We do not consider the authorities cited by Ms Taylor-Cyphers decisive.  Ellis and Davis both involved significantly larger losses and commensurately higher starting points.  We reject the submission that in comparing the starting point in Davis (four years) with that in this case (three years) the fact that Ms McHugh’s theft amounted to 22 per cent only of that in Davis suggests the starting point was excessive.  Quantum of loss is one factor only.  The impact on a small company may be just as important.  Nor is Colosimo a useful comparator.  It was not an employee case and did not involve the same gross breach of trust.  
[34]	By contrast the authorities cited by the Crown support the starting point adopted.  In Luoni the offending was by an office administrator over a 13-month period and involved a total loss of $51,005.82.  The starting point was three to three-and-a‑half years’ imprisonment.  On appeal Heath J took no issue in that respect.  In Kerwin the employee stole $90,637 to support a methamphetamine addiction.  The offending occurred over a 24-month period involving 141 separate defalcations.  His employer additionally incurred investigatory costs of over $30,000.  On appeal Goddard J considered the appropriate starting point was three years’ imprisonment.  In Wilton the offending was against the defendant’s sick father.  On 63 occasions money was transferred under power of attorney to her own accounts.  In addition, $21,000 was withdrawn in EFTPOS transactions.  The Judge adopted a starting point of three-and-a-half years’ imprisonment based on the aggravating factors of the significant sum taken, premeditation, serious breach of trust and the effect on the defendant’s father.  On appeal Clifford J regarded a starting point of two years and nine months’ imprisonment appropriate.  In Mackley the defendant wrote out 86 cheques on her employer’s bank account for herself, friends and other businesses for personal products she had purchased.  The amount stolen was $173,318.95 which was used to support her lifestyle.  A small recovery was made.  At sentencing the Judge adopted a three-and-a-half year starting point which was upheld by Gendall J on appeal.  His Honour noted Ms Mackley’s culpability was reasonably high.  
[35]	In our assessment the starting point adopted in this case was towards the upper end of that indicated by the comparable authorities but nevertheless within range, particularly having regard to the duration of what we consider to be insidious and reasonably sophisticated offending.
[36]	As to discounts, we are not satisfied that a discrete discount was appropriate in respect of the son’s circumstances.  The pre-sentence report records that Ms McHugh’s 27-year-old son resides with her as he suffers from anxiety and panic attacks, that he is on a supported living benefit and Ms McHugh takes care of him “as he has not been able to work in over a year”.  There is no independent corroboration of his mental health position.  We accept also that he has, in the past, held at least one position of paid employment.  
[37]	It is an unfortunate feature of most sentences of imprisonment that they have implications for third parties.  As Ms McHugh herself recognises, the most she could have expected was “some small discount”.  In the absence of better evidence about her son’s dependence we cannot identify any error in the Judge’s approach.  Indeed, it is not even apparent that this issue was raised at sentencing.
[38]	As to the offer of reparation, this was necessarily considered in the context of:
(a)	Ms McHugh’s inability to make any immediate payment and her uncertain future ability, and
(b)	her ongoing denial of the offending and adherence to the discredited defence that she was acting on her employer’s instruction.
[39]	An offer of amends must be capable of fulfilment.  Typically also it will only be given significant weight to the extent it represents a genuine effort by the offender to accept responsibility for the offence and to put things right.  Absent an acceptance of responsibility, the Court’s concern will always be whether, whatever offer is made, there will be consistent performance in discharge of the commitment.  We are not therefore persuaded that the Judge erred in this respect either.
[40]	For completeness we add that our decision would not have been different if the conviction appeal in respect of Charge 10 had been allowed.
Result
[41]	The appeal against conviction is dismissed.
[42]	The appeal against sentence is dismissed.

Solicitors: 
Crown Solicitor, Auckland for Respondent