Lombard sentencing appeal kicks off
The failure of the directors of collapsed Lombard Finance and Investments to disclose information was not deliberate but a misunderstanding of the law, their lawyer says.
The four directors, including former justice ministers Sir Douglas Graham and Bill Jeffries, began appeals against their sentences in the Supreme Court this morning.
Wellington-based Lombard collapsed in April 2008 after the company issued a prospectus in December 2007 saying it had enough money to meet its debts as they fell due.
Lombard was put into receivership in April 2008, leaving about 3600 unsecured investors $111 million out of pocket.
The Supreme Court in October dismissed an application by the directors to appeal their convictions.
In March, 2012, the four were convicted in the High Court of misleading investors in the lead-up to the company's collapse in April 2008.
They were found to have omitted details from a December 2007 prospectus about late loan repayments and falling cash reserves.
But the Supreme Court also ruled it would allow Graham, Jeffries, fellow director Lawrence Bryant and chief executive Michael Reeves to appeal against their sentences, including home detention.
The sentence appeal was on the question of whether the Court of Appeal erred in allowing the solicitor-general's appeals for harsher penalties than handed down by the High Court.
Appellant lawyer James Farmer, QC, said this morning three issues formed the sentence appeal.
This included whether imprisonment had been an appropriate starting point for sentencing, after the Court of Appeal had increased it based on its view the High Court had not given enough weight to deterrence and denunciation.
This was important because of the characterisation of the Lombard offending, versus that of other failed finance companies, Farmer said.
"They did not understand the purpose of the disclosure regime.
"All of us, being lawyers, from time to time misunderstand statutes."
Chief Justice Dame Sian Elias said Farmer was building it to say the error was a misunderstanding of law, rather than a deliberate error.
Farmer sought for the directors' sentences to be restored to those given in the High Court.
Graham and Bryant were originally sentenced to 300 hours' community work and ordered to pay $100,000 reparation.
Reeves and Jeffries were sentenced to 400 hours' community work, though last July the Court of Appeal described these sentences as "manifestly inadequate".
Graham's sentence was increased to six months' home detention, allowing for an hour-long walk each day for his health.
The directors have remained free to leave their homes pending the appeal.
The hearing continues.