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A panel’s decision to bar a high-profile liquidator from continuing to practice insolvency is not “a life sentence” if it can show that his crime in the mid-1990s does not reflect his current character, a court has heard.
In May, the insolvency practitioner and Stuff Columnist Damien Grant, 54, had his license application rejected by the New Zealand Restructuring, Insolvency and Restructuring Association (Ritanz) due to 26-year fraud convictions.
Grant’s lawyers and Ritanz squared off in Auckland High Court on Wednesday before Judge Matthew Muir as Grant seeks judicial review of the decision.
For judicial review, the court will assess whether Ritanz’s refusal to admit Grant falls outside of a permitted range of decisions in light of the evidence presented at the time.
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As of September 1, the new laws require that all insolvency practitioners be licensed by an accredited body. Those who are not CPAs, like Grant, must apply to Ritanz in order to continue practicing.
Grant has credit card convictions from the late 1980s and a fraud conviction when he was 26 years old in 1994, for his involvement in a stock trading scam. He was sentenced to 30 months in prison and served 16.
A requirement of the new licensing regime is that the applicant be a “fit and proper” person.
Grant has operated his business, Waterstone Insolvency, since 2006, but will not be able to continue as an insolvency practitioner without the license.
Grant seeks an order to overturn the decision and be admitted as a member or for Ritanz to hold a hearing and consider his request “in accordance with the law.”
Judge Muir said cases like this were “deeply troubling” because they raised questions about redemption and what role he played in analyzing Grant’s application.
“Redemption is at the heart of our society,” Muir said.
He said it was “a very difficult case” that he had thought about carefully
He said the panel faced extremely difficult work evaluating Grant’s application.
It was not his role to determine Grant’s character, but to assess whether the process was carried out legally and fairly, he said.
Judge Muir said that honesty was at the heart of a liquidator’s duties and there was nothing to suggest that something Grant had done as a liquidator was dishonest.
“Liquidators play a tremendously important role in our society.”
It was entirely appropriate for the liquidators to be considered fit and proper people, he said.
The judge asked if Grant had provided any tangible evidence of remorse for his crime beyond statements made before a Ritanz panel and publicly.
For example, who were the victims of Grant’s crime, what were his losses, and whether he had made contributions to victims’ rights groups, Judge Muir asked.
However, he later noted that criminals generally tended to hide past convictions, while Grant had made his public, he said.
“That’s part of the regret.”
Judge Muir said there was nothing to stop Grant from running for Ritanz again.
Stephen Hunter QC, representing Ritanz, said Grant was the first “tough” applicant the panel had to evaluate under the new regime, he said.
The panel did not ignore the credible things Grant had done in his career as a liquidator.
“All of that goes into the decision,” Hunter said.
But not enough evidence had been given to him to rule that the good character test had been met, he said.
He accepted that the offense happened a long time ago. Now it was Grant’s turn to show the panel that he was no longer at risk of committing a crime again, he said.
“He did not say this is a life sentence.”
Judge Muir questioned what else Grant had to do to show that he was a person of good character given his age and the time between offenses.
“If not now, then when?” Muir said.
“People have to get a second chance. What else can they do?”
Hunter said it would be unprecedented for the court to step in and make a decision on Ritanz’s behalf, he said.
Grant’s attorney’s presentations gave “a strong flavor” that people had been put in a position to adjudicate their competitors.
“That is an inevitable consequence of the plan and it is not uncommon.”
He refuted allegations that the panel’s decision was biased.
Just because an industry panel included members evaluating their competitors didn’t mean they were going to take advantage of that to improve their market position, he said.
Ritanz’s panel of five had only two insolvency practitioners, he said.
Grant’s attorney, Bob Hollyman, QC, said Grant had provided a service to the company’s boards of directors and was politically active “in a positive way contributing to our democracy,” a reference to Grant’s columns that often have a political issue.
In Grant’s 15 years as a liquidator, there had been no sign of dishonest behavior on his part and he was now “a model for reform,” Hollyman said.
He was often approached by people who wanted to be “on the right track.”
“He’s seen as someone who has accomplished that,” Hollyman said.
Grant frequently acted as a sounding board for people with troubled pasts, he said.
“It is not something that is comfortable or pleasant, but it is something that seems important to him.”
Grant was in his early 20s during his six years of crime, and since then there have been 27 “positive years,” Hollyman said.
Grant studied while in prison and completed a bachelor’s degree in commerce after getting out of prison. He then went on to study for a degree in economics, Hollyman said.
He made his first liquidation in 2006 and at that time there was no requirement to enter the profession, he said.
He said Grant had never tried to minimize or downplay his crimes or convictions.
Judge Muir said Ritanz’s attorney, Stephen Hunter, QC, had said Grant had said his crime was “somewhat romanticized.”
Part of Grant’s offense involved gold bullion deals and was made to look like something out of a James Bond movie, Judge Muir said.
Hollyman said Ritanz’s approach weighed the aggravating factors of Grant’s offense against the evidence of his reform and his positive qualities.
His ruling had improperly put a retrospective focus on the details of Grant’s crime, rather than a prospective one that considered evidence of his reform, he said.
Some of the evidence included 18 affidavits from high-profile legal and financial supporters and 12 new affidavits, including one from a psychologist.
Assessing whether an applicant met the standards should be a prospective exercise, he said, pointing to earlier case law, he said.
Judge Muir said he agreed that a prospective approach should be applied.
“Clearly that’s the law,” he said.
But Muir disagreed with an allegation by Hollyman that there was an apparent bias at play by the panel against Grant.
“I don’t have the sense of an apparent bias in this case,” Muir said.
“The idea of these five people for Mr. Grant is one that I would need to persuade myself of.”
The charge of apparent bias was easy to make and difficult to defend, he said.
Judge Muir reserved his decision.
