R v Douglas [2012] NZHC 844 (30 April 2012)

Last Updated: 13 January 2013

ORDER PROHIBITING PUBLICATION OF THE JUDGMENT AND ANY PART OF THE PROCEEDINGS (INCLUDING THE RESULT) IN NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLE DATABASE UNTIL FINAL DISPOSITION OF TRIAL. PUBLICATION IN LAW REPORT OR LAW DIGEST PERMITTED.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2010-004-022101 [2012] NZHC 844

THE QUEEN

v

WAYNE LESLIE DOUGLAS NEAL MEDHURST NICHOLLS

Hearing: 30 April 2012

Appearances: N Williams, S Symon and M Thomas for the Crown

B Gray QC, R Sussock and G Tompkins for the Accused

Judgment: 30 April 2012

_{[ORAL] JUDGMENT OF WYLIE J}

Distribution:

N Williams: [e-mail]

S Symon:

M Thomas: [e-mail]

B D Gray QC: [e-mail]

R Sussock: [e-mail]

_{G Tompkins:}

R V DOUGLAS & ANOR HC AK CRI 2010-004-022101 [30 April 2012]

Introduction

[1] Messrs Nicholls and Douglas face three charges:

[a] First, they are charged under s 220 of the Crimes Act 1961. It is alleged that between 1 April 2002 and 30 September 2004, they had control of over $14.4 million of investor funds, and that they intentionally dealt with those funds other than in accordance with the requirements of Perpetual Trust Limited as trustee under a debenture trust deed dated 5 April 2002.

[b] Further, they face two charges under s 242 of the Crimes Act. It is alleged that they made or concurred in the making or publishing of false statements in a prospectus dated 30 June 2003, and in a further prospectus dated 10 September 2004. In particular, it is alleged that they failed to disclose related party lending the Crown asserts was made by Capital + Merchant Finance Limited to S.I.R Investments Limited, Venice Investments Limited, Rhode Capital Limited and At The Hub Limited.

[2] There is no jury involved in these proceedings. I am hearing them as a Judge alone.

Proposed Evidence

[3] The Crown proposes to call evidence from a Mr Graham Jordan. Mr Jordan is a partner of Auckland-based law firm Lowndes Jordan.

[4] Mr Jordan had previously prepared a 31-page brief of evidence. As I understand it, the Crown made that brief available to the defence well prior to the hearing. No objection was taken to it.

[5] Today, a further six-page supplementary brief of evidence was provided by

Mr Jordan. That supplementary brief has become necessary because evidence has

been put before the Court through the cross-examination of Crown witnesses, and through various documents the defence has put before the Court as exhibits.

[6] In the event, Mr Gray QC, appearing for the accused, objected to Mr Jordan’s

evidence, and in particular, his supplementary brief of evidence.

Submissions

[7] In brief, Mr Gray asserted that Mr Jordan is not an “expert” as that word is defined in the Evidence Act 2006. Further, he submitted that Mr Jordan’s intended evidence was not likely to be substantially helpful to the Court. Thirdly, he argued that the supplementary brief of evidence, and in particular [13] was redolent of advocacy. He argued that this is because the proposed evidence is not in a field of expertise possessed by Mr Jordan. He submitted that Mr Jordan was endeavouring to express views on issues that I will ultimately have to decide, and that the proposed evidence was both irrelevant and inadmissible.

[8] Mr Williams, for the Crown, argued that the proposed evidence is admissible. He referred to the definition of the word “expert” contained in s 4 of the Act. He referred to Mr Jordan’s initial brief of evidence and in particular to [10] through to [14] where Mr Jordan set out his qualifications and experience. He submitted that Mr Jordan is an expert because he has specialised knowledge in the field of commercial law. He also argued that Mr Jordan’s proposed evidence is “expert evidence” as those words are defined and that it is likely to be substantially helpful to the Court. He referred to s 25(2) of the Act and noted that the fact that Mr Jordan proposed to give evidence on the ultimate issue does not render his evidence inadmissible.

Analysis

[9] The Crown proposed to call Mr Jordan as an expert witness. Mr Jordan proposed to express opinions on various matters which are before the Court.

[10] Section 25 of the Evidence Act outlines the requirements for the admissibility of expert opinion evidence. In order to come within the provisions of s 25, the opinion must be that of an expert. It must comprise expert evidence and it must offer substantial help to the Court as fact finder in understanding other evidence or in ascertaining any fact in the proceeding.

[11] The words “expert” and “expert evidence” used in s 25 are defined in s 4 of the Act. They form a threshold before the giving of opinion evidence by an expert can be assessed under s 25.

[12] The first issue is therefore whether or not Mr Jordan is an expert.

[13] The word “expert” is defined in s 4 as follows:

expert means a person who has specialised knowledge or skill based on training, study, or experience

[14] Mr Jordan proposed to give evidence of his relevant qualifications and experience. In brief, he graduated from the University of Canterbury in 1974 with a Bachelor of Laws (Hons) degree. He was admitted to the bar in 1975 and he practised initially in a commercial law firm in Christchurch. He then became a founding partner of Lowndes Jordan in Auckland. He has practised solely as a commercial lawyer since 1988. The brief of evidence contains an assertion that his practice has provided him with considerable experience in securities offers and in corporate and financing structures for a range of developments. He asserts that his experience has provided him with a broad commercial transactional knowledge. He then sets out various particular areas of practice which are relevant to the experience he claims. In addition, he states that he is a member of the New Zealand Institute of Directors, the Chamber of Commerce, INSOL New Zealand and INSOL International. He is also the Chairman of a fisheries group of companies with significant assets and annual sales. It is also clear from his proposed brief of evidence that he has advised a range of public issuers of securities on the issue of prospectuses and investment statements and that he is familiar with the financial disclosure requirements contained in the Securities Act 1978, the Securities Regulations 1983, the Companies Act 1993 and the Financial Reporting Act 1993.

[15] I am satisfied that Mr Jordan can properly claim to have specialised knowledge or skill in commercial law matters, and in particular with security offers and commercial transactional matters involving corporate and financing structures.

[16] The evidence which the Crown proposes to adduce through Mr Jordan is said to be expert evidence. The words “expert evidence” are also defined in the Act. The definition reads as follows:

expert evidence means the evidence of an expert based on the specialised knowledge or skill of that expert and includes evidence given in the form of an opinion

[17] I have concluded that Mr Jordan is an expert as noted above. The evidence which he proposes to give is based on his specialised knowledge or skill. The evidence does extend to opinion evidence, but opinion evidence is not precluded from being expert evidence in terms of the definition.

[18] It follows that Mr Jordan is entitled to give opinion evidence provided that that opinion evidence comes within the provisions of s 25(1) of the Act.

[19] Section 25(1) provides as follows:

25 Admissibility of expert opinion evidence

(1) An opinion by an expert that is part of expert evidence offered in a proceeding is admissible if the fact-finder is likely to obtain substantial help from the opinion in understanding other evidence in the proceeding or in ascertaining any fact that is of consequence to the determination of the proceeding.

...

[20] As can be seen, there is a two-part test; first, is the Court likely to obtain substantial help from the opinion of the expert in understanding other evidence in the proceeding, and secondly, is the Court likely to obtain substantial help from the opinion of the expert in ascertaining any fact that is of consequence to the determination of the proceeding.

[21] Evidence will be substantially helpful where it helps the Court as fact finder to understand other evidence in the proceeding. Here, Mr Jordan has stated that he has been requested for an opinion as to the following matters:

5.1 The commercial effect of the arrangements.

5.2 The classification of those arrangements viewed as a whole under the Debenture Trust Deed and whether they in whole or in part constitute related party loans.

5.3 The commercial rationale for, or other purpose of the arrangements.

5.4 Whether the arrangements are representative of usual commercial practice for property development.

[22] The matters in issue in this proceeding involve the commercial and legal effect and consequence of various arrangements said to have been entered into in or about 2003 and 2004 in relation to a development situated in Palmerston North known as The Hub. The principle issues are whether or not the arrangements entered into are caught by the related party provisions contained in the debenture trust deed and whether they should have been disclosed in the two prospectuses detailed in the indictment. In my view, Mr Jordan’s opinion on the matters referred to in [5.1] and [5.2] of his brief of evidence are likely to be of substantial help to me as the sole fact finder. His opinions as to the commercial rationale for the arrangements and whether they are representative of usual commercial practice for property development are likely to be less helpful to me, but I am not at this stage prepared to rule that those aspects of the evidence are inadmissible.

[23] The second head in s 25(1) allows the giving of expert opinion evidence if the evidence is likely to help the fact finder in ascertaining any fact that is of consequence to a determination of the proceeding. This head is relatively uncontroversial. In my view, the evidence which Mr Jordan proposes to give is likely to help me to understand the evidence of other witnesses and to assist me in avoiding drawing the wrong inferences from their evidence. It follows that his evidence is admissible under either head contained in s 25(1).

[24] Under s 25(2) of the Act, Mr Jordan’s evidence is not inadmissible simply

because it is about an ultimate issue to be determined in the proceeding.

[25] Mr Gray suggests that parts of Mr Jordan’s evidence, and in particular parts of his supplementary brief, suggest advocacy and a lack of independence.

[26] Mr Gray is correct that [13] in the supplementary brief of evidence is not particularly well expressed. It may however be that it has a ready explanation. That will have to be determined when the evidence is given. It may be that it is qualified in oral evidence.

[27] The Court of Appeal observed in the Commissioner of Inland Revenue v BNZ Investments Limited[1] that there can be cases in which the position of a proposed expert is so lacking in independence as to make it obvious that an opinion he or she expresses in evidence will not be able to be substantially helpful, and in such circumstances it can be appropriate to rule out the evidence prior to the same being given.

[28] I am not persuaded that Mr Jordan’s proposed evidence is advocacy or that it demonstrates a lack of independence such that the evidence will not be substantially helpful to me. In his proposed brief of evidence, Mr Jordan states that he is aware of the code of conduct for an expert witness. He records that he will give his evidence to assist the Court and that he will be impartial. I am not persuaded that Mr Jordan will be partisan. Indeed, I note parts of the evidence are likely to be helpful to the defence; in particular, opinions Mr Jordan proposes to express regarding whether or not the transactions the subject of these proceedings are caught by the debenture trust deed are likely to be helpful to the accused.

[29] It seems to me that the parts of the evidence which Mr Gray has criticised, more properly go to weight. They can be explored under cross-examination if

_necessary.

[30] In the circumstances, I rule that Mr Jordan’s evidence can be called by the

Crown.

[31] I reserve to Mr Gray the right to object to any particular parts of the evidence when the same is being given.

Wylie J

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[1] Commissioner of Inland Revenue v BNZ Investments Limited [2009] NZCA 47, (2009) 19 PRNL

553 at [22].