The Court of Appeal has reserved its decisions on the appeals by the directors of the failed Lombard finance company against their convictions for misleading investors, and the Crown appeal to have the directors' sentences increased.
At the end of the four-day hearing today, Justice Tony Randerson, who headed the three-judge court, said the judges understood it was a case of great significance to the directors and investors alike.
Written judgments on both appeals would be delivered in due course, Justice Randerson said.
The directors, including former cabinet ministers Doug Graham and Bill Jeffries who were both justice ministers, were found guilty last year of having made misleading statements in prospectus documents issued in late December 2007 that they had confidence the company would continue to be able to pay its debts in the following year.
Less than four months later, Lombard Finance and Investments went into receivership owing more than $125 million to 4400 investors. In the period after the issue of the prospectus until the company's collapse, more than $10m was invested or reinvested.
The directors maintained the prospectus was accurate and adequate, but at their trial they were found not to have had reasonable grounds for believing that.
Graham and Bryant were sentenced to 300 hours' community work and $100,000 reparation and Jeffries and Reeves were sentenced to 400 hours' community work.
While the Crown did not allege dishonesty, the Court of Appeal heard today that it was alleged the directors' actions had developed into gross negligence as the company's position deteriorated.
The court was told earlier today that it was untenable for directors of the failed finance company Lombard to say that they thought the company would "get through".
All the pointers were by December 2007 that the company would not get through, Crown lawyer Colin Carruthers, QC, told the three appeal judges.
There was no hint of that, or even that they thought they would "run close", in the prospectus Lombard Finance and Investments issued in December 2007, he said.
Carruthers said that a succession of local events was recognised in the internal company papers in the months before it collapsed in April 2008.
The global financial crisis was remote and its timing had nothing to do with the deterioration of the company, he said.
The company was not a victim of events that could not have been foreseen, he said.
In December 2007 the directors authorised the issue of an amended prospectus expressing confidence in the ability of the company to pay its debts over the coming months.
At their trial they were found to have believed in the adequacy and accuracy of the statements, but a judge thought they did not have reasonable grounds for their beliefs.
Carruthers said it was unreasonable and untenable for the directors not to have looked at the information they had about the company's performance and compare it with key milestones an independent Ferrier Hodgson report said had to be achieved in order for the company to be viable.
Carruthers said the directors had failed to analyse and consider the Ferrier Hodgson report. If the directors discussed it at all it was not noted in the minutes of their meetings.
Less than two weeks before the company collapsed the directors considered the $2m capital note Lombard's parent company, Lombard Group, had invested. By that time there was not enough money to withdraw the investment so it was rolled over, but as secured debenture stock rather than an unsecured capital note.
Carruthers said that change can only have been made with the best interests of the Lombard shareholders in mind.
Graham, Jeffries, and Bryant were shareholders in Lombard Group. Reeves had no direct or legal interest but members of his family had a beneficial interest in a trust that held shares in Lombard Group, the Court of Appeal had been told earlier.
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