Justice ‘not served’ by prolonging prison sentence for businessman

Justice was no longer served by prolonging the stay in prison for a businessman whose tax crimes left dozens of workers owed more than $100,000 in unpaid KiwiSaver contributions, the Court of Appeal has ruled.

David John Gower was sentenced in Auckland District Court on May 16 to two years and three months in prison, but appealed the sentence.

Late last month, Gower had his sentence reduced to four months’ community detention to be served at a house in Blenheim.

Now the Court of Appeal has published its reasons, acknowledging that before his Auckland fire protection firm ran into financial trouble, he led a “blameless life”.

Justices Peter Churchman, Patricia Courtney and Sally Fitzgerald said the purposes of sentencing for offending of the kind Gower had pleaded guilty to under the Tax Administration Act, were to hold the offender accountable, promote a sense of responsibility, denounce their behaviour, and to deter offending.

“We accept that the purposes of imposing a sentence of imprisonment have largely been met by the fact that Mr Gower has already served six months in prison,” said Justice Churchman, who delivered the judgment. “From the evidence before us, it is apparent these criminal proceedings have greatly impacted the appellant.

“A sentence of 22 months’ imprisonment would normally translate to a sentence of home detention of around 11 months. We are satisfied that the purposes of sentencing can be achieved by a sentence other than imprisonment.”

Gower was the sole director of a large company called AFS Total Fire Protection, which ran into financial difficulties in 2014.

“One of the responses adopted by the appellant was to stop paying PAYE (including pay-as-you-earn taxes, as well as student loan, KiwiSaver and child support deductions, collectively referred to in this judgment as PAYE) to Te Tari Taake Inland Revenue Department (IR),” Justice Churchman said.

Between July 15, 2014 and December 5, 2016, PAYE deducted from employees’ wages were either missed or not paid in full on 49 non-consecutive pay periods.

“The appellant accepts that the offending, in the partial non-payment of tax, ‘propped up’ the business. However, this was done to enable the business to be sold as a going concern so the company’s creditors – including, importantly, the core tax owed to the IRD – could be paid,” he said.

Gower had argued that his offending was not “fuelled by self-serving financial gain”.

Gower paid $300,000 from his own funds towards clearing the unpaid tax bill.

However, “even if such offending is motivated by hopes such as saving companies and protecting the employees of those companies, such motives do not justify the offending.”

Ultimately, after various late payments were made and arrangements entered into with IR in an attempt to clear the debt, the Crown accepted that the total loss to the public was about $700,000.

In December 2016, following failed attempts to clear the debt, IR applied to place the company in liquidation.

AFS installed and maintained fire and emergency systems. It had about 80 staff.

The court accepted it was not a case where money that should have gone in payment of tax went to fund the offender’s lifestyle. Before the company ran into trouble, Gower had been of good conduct and had led a “blameless life”, including volunteering for the Coast Guard.