THE QUEEN v ANDREW NICHOLAS HOLDGATE [2001] NZCA 169 (24 May 2001)

IN THE court of appeal of new zealand

ca466/00

THE QUEEN

V

ANDREW NICHOLAS HOLDGATE

Hearing:	21 May 2001
Coram:	Tipping J Heron J Paterson J
Appearances:	D R La Hood and L Ord for Appellant J C Pike for Crown
Judgment:	24 May 2001

judgment of the court DELIVERED BY TIPPING j

[1] The appellant, Mr Holdgate, was found guilty by a jury in the District Court at Auckland on 8 charges of fraudulent use of documents, and one charge of converting a vehicle.He was sentenced to imprisonment for 3½ years. He appeals against conviction and sentence.

[2] Mr Holdgate was at all relevant times an undischarged bankrupt who claimed that he was in fact solvent and that his bankruptcy should be annulled.He had been engaged in the business of earthworks and allied contracting.The complainant, Mr Shepherd, was in the same line of business but on a much smaller scale.Mr Shepherd, who was then a friend of Mr Holdgate, purchased plant and equipment from the latter's bankrupt estate.The purchase was of course in formal terms from the Official Assignee.Mr Shepherd raised a loan for the whole price of $250,000.His evidence was that he had done this to enable his friend, Mr Holdgate, to continue running the business in which he had been engaged prior to his bankruptcy and that Mr Holdgate was to be his employee.Mr Holdgate did indeed continue to run the business but maintained that he was doing so as the beneficial owner rather than as an employee.While acknowledging that he left virtually everything to Mr Holdgate, Mr Shepherd maintained the view that the business was his beneficially and Mr Holdgate was the manager.

[3] The basis of three of the charges was that Mr Holdgate had extracted funds from the business for his personal benefit without Mr Shepherd's consent, indeed without his knowledge.The remaining charges concerned vehicles in respect of which Mr Holdgate had changed the registration details in his own favour, again without Mr Shepherd's knowledge or consent.The arrangements between the two men were informal.There was no written agreement or other direct written evidence as to ownership of the business.Wage records did, however, support Mr Shepherd's version of events.

[4] Mr Holdgate's case involved the proposition that Mr Shepherd was simply a "front" for him.Implicit in this contention was the proposition that Mr Holdgate was, with Mr Shepherd's help, perpetrating a fraud on his creditors by depriving them of the profits on the contracts undertaken by the new business which should have been accounted for by Mr Holdgate as after acquired property. In the result substantial profits were generated which on Mr Shepherd's view belonged to him, and on Mr Holdgate's view to him.It was on this basis that Mr Holdgate purported to justify his withdrawal of funds and assets from the business.

[5] The case turned essentially on which version the jury found to be the correct one.To succeed the Crown had to prove the charges beyond reasonable doubt.If there was any reasonable possibility that Mr Holdgate's version of events was right, he could not be convicted.The jury had the benefit of listening to extensive evidence from both men and indeed from a number of other witnesses.They came to the conclusion that Mr Shepherd was telling the truth and Mr Holdgate was not.The defence was run on the basis that far from Mr Holdgate cheating Mr Shepherd, the true position was the reverse.Mr Shepherd was cross-examined on the basis that when the new business started generating large profits Mr Shepherd had become "greedy" and had "ratted" on Mr Holdgate. Mr Shepherd was also alleged to have "ripped off" Mr Holdgate and when he withdrew money from the business, Mr Shepherd was alleged to have "nicked" it.

[6] The exchange between defence counsel and Mr Shepherd in relation to the latter contention was:

Q. Put simply, you nicked the money ... didn't you?

A. That is absolute nonsense.I am surprised that you stand there and say that Sir.

[7] Against that broadly stated background we turn to examine the grounds upon which the conviction appeal is based.

Inadequate time to prepare defence

[8] For reasons which need not be discussed but which involved the withdrawal of earlier counsel, trial counsel who is very experienced received his instructions only four days before the commencement of the trial.He professed himself ready to proceed and has stated in an affidavit that while he would have preferred more time he felt able to proceed.

While I had to come to grips with the detailed documentary material and the factual complexities of the case, at no time did I consider that I was not ready to proceed at the commencement of the trial or to proceed further as the trial proceeded.Had that been the case, I would have made application for a remand before the trial commenced or during the course of the trial if I had considered it necessary to do so notwithstanding that His Honour Judge Lance was adamant that the trial proceed on 2^nd October 2000.

[9] Trial counsel has also stated that the appellant knew his case intimately. He had kept detailed and thorough records about the matters before the Court. He had these records with him during the course of the trial, and was able to give counsel immediate assistance when he required it.Counsel has observed that the appellant was able to comment quickly upon any matter he had raised with him as the Crown witnesses were giving their evidence.Counsel accepts that during the course of the trial he relied upon Mr Holdgate to keep track of and refer him to many of the documentary items involved in the trial.Mr Holdgate was allowed to be seated next to him at the Bar table, and counsel says that from time to time during the course of the trial which lasted 12 days he relied upon Mr Holdgate's intimate knowledge of the documents which became relevant as the trial progressed.

[10] In his evidence Mr Holdgate refers to a number of matters which trial counsel did not raise in the course of cross-examination of the complainant. These matters relate to statements made by the complainant during the course of depositions which Mr Holdgate suggests it would have been helpful to bring out.Trial counsel's failure to cross-examination on these various points is raised as supporting the view that counsel had not had adequate time to prepare.We are not persuaded that this is the correct view of the matter. Trial counsel's grasp of the case, as evident from his cross-examination of Mr Shepherd and other Crown witnesses, suggests he was properly prepared.The cross-examination of Mr Shepherd was interrupted by an overnight adjournment and, as earlier indicated, the whole trial lasted for 12 days.

[11] Mr La Hood argued that it was wrong for trial counsel to have to rely on Mr Holdgate as the case proceeded.He suggested that counsel should have been prepared to such an extent that such reliance was not necessary.The extent to which counsel chooses or needs to refer to his client during the course of trial will obviously differ from case to case, and will depend significantly on the detail and intricacy of the issues.We cannot accept the proposition advanced by Mr La Hood in the absolute terms in which it was put forward.Each case will depend on whether, in the end, the person on trial has received a fair trial.In the absence of a fair trial a miscarriage of justice will have occurred.

[12] It was in this case entirely sensible for trial counsel to involve Mr Holdgate in the presentation of his defence in the way he did.We do not consider the matters put forward as failures on counsel's part are indicative of a lack of time properly to prepare for trial.We consider they derive in significant part from counsel's perception as to how Mr Holdgate's defence ought best to be presented.In any event it is often possible with the wisdom of hindsight to point out matters which could have been put which were not, and respects in which matters put could have been more effectively put.

[13] No adjournment was sought by trial counsel who, as stated above, has stated that he would have made such an application had he considered it necessary, notwithstanding the trial Judge's previously expressed views on the subject.It will be a rare case in which an allegation of insufficient time for preparation will succeed when no adjournment has been sought.We do not consider this to be one of those cases.The question is more whether trial counsel committed a radical error by not seeking an adjournment.Having considered that point against Mr La Hood's well presented submissions we are not satisfied that trial counsel erred, let alone radically erred, in not seeking an adjournment.The first ground of appeal therefore fails.

Errors of counsel

[14] We now examine the appellant's complaints about lack of cross-examination of Mr Shepherd, in the respects raised, as allegations of radical error by trial counsel.The basic thrust of the defence case has already been outlined. It was, as trial counsel has said, to put the complainant on trial.Mr Holdgate does not complain at this approach nor does he suggest that it was taken without his knowledge and approval.Indeed this approach does seem to have been about the only line which the defence could have taken.Mr La Hood argued, in a different context, that the proposition that Mr Holdgate had an honest belief that the business was his, had not been adequately dealt with by the Judge in his summing up.We will return to the point but for present purposes Mr La Hood sensibly acknowledged that both in itself, and in the light of Mr Holdgate's professed purpose of trying to evade his duties as a bankrupt, the idea of running an "honest belief" defence as an alternative to the contention that it was Mr Shepherd who was cheating Mr Holdgate, was hardly appropriate.Such an alternative would probably have been seen by the jury as substantially undermining the principal defence.Furthermore, the need for the belief to be honest would not have sat comfortably with Mr Holdgate's approach to his bankruptcy obligations.

[15] We will not set out the individual points which Mr Holdgate contends trial counsel should have raised from the depositions.In the light of the main thrust of the defence, it is more from the point of view of Mr Shepherd's general credibility that the points might have been of use rather than for their detail.The case involved both necessarily and potentially quite a number of factual issues often of a financial kind.Mr Shepherd was cross-examined over the better part of two days.As noted above, it will often in such circumstances be possible to find some points which in retrospect it might have been helpful to put.Our overall assessment is that trial counsel made significant progress in his cross-examination of Mr Shepherd.He brought out a number of points which were helpful to the defence.In spite of that the jury obviously disbelieved Mr Holdgate's evidence.Against the whole ambit of the case, the defence being run and the progress which trial counsel was able to make we do not consider that either individually or cumulatively the matters that trial counsel did not put to the complainant amounts to a radical error on counsel's part.We are satisfied that no miscarriage of justice has arisen in this respect.This ground of appeal fails.

Sufficiency of evidence

[16] Mr La Hood argued that the verdicts were unreasonable and could not be supported having regard to the evidence.It was open to the jury to accept Mr Shepherd's evidence and reject that of Mr Holdgate.The absence of much documentation to support either view, while understandable in the circumstances, meant that it was essentially a question of whom the jury believed.Mr La Hood suggested there was compelling evidence to support the defence case.He then proceeded thoroughly and conscientiously to itemise that evidence.This issue can be tested by asking whether a s347 application at the close of the evidence should have succeeded.In our view it should not.There was evidence which, if accepted by the jury, supported the convictions.We are unable to hold that a reasonable jury must have entertained a reasonable doubt: R v Ramage [1985] 1 NZLR 932 (CA).In coming to this conclusion we have considered all the points made by Mr La Hood, both orally and in writing.

Summing up

[17] After discussion with counsel the issue became whether the Judge had erred in failing to direct the jury adequately about the appellant's "honest belief" alternative.It is unnecessary to consider the circumstances in which a trial Judge must put to the jury an alternative not put by counsel for the defence. That there are such circumstances is beyond doubt.Whether the present was such a case does not arise because we are satisfied the Judge did sufficiently address the issue.An exact transcript of the summing up was not available, but the Judge's reconstruction in his report enables us to be confident as to the broad thrust of the directions.When dealing with the concept of intent to defraud, the Judge, speaking of the dishonesty inherent in that concept said:

"You act dishonestly if you act in breach of a legal obligation and without an honest belief that you are entitled to act in that way."

The Judge was thereby instructing the jury that if Mr Holdgate had an honest belief that he was entitled to act as he did, he was not dishonest and thus cannot have had the intention to defraud.

[18] A little later the Judge said:

"Holdgate's defence is that he was entitled to the money as he was running his own business:to find him guilty you must be satisfied beyond reasonable doubt Holdgate knew he was not entitled to the money; was dishonest in what he did, and knew it at the time."

[19] The reference to the need to be satisfied Holdgate knew he was not entitled to the money (and also by parity of reasoning, entitled to the vehicles) must necessarily, in the light of the earlier direction, have indicated to the jury that if Mr Holdgate had an honest belief he was so entitled, he could not be found guilty.These directions appropriately covered the honest belief issue.But Mr La Hood criticised the direction "was dishonest in what he did" on the basis that the jury might have thought that Mr Holdgate's general dishonesty as regards his bankruptcy would be enough.It is hardly possible in the context that the jury could have thought this, but in any event the Judge had earlier told the jury that the trial was "not about Holdgate's duties as a bankrupt and whether or not he had breached them" but was about "fraud and whether the Crown had proved the ingredients of the various charges".We are satisfied that neither by omission or commission did the Judge misdirect the jury.This ground of appeal must also fail and with it the appeal against conviction.

Sentence

[20] Mr La Hood submitted that the sentence of 3½ years imprisonment was manifestly excessive.The total value of the assets involved was about $175,000.The Judge also referred to the sum of $85,000 or thereabouts said to have been the cost to Mr Shepherd of remedying the consequences of Mr Holdgate's dishonesty.The Judge indicated that he was proposing to take this aspect into account in reliance on the decision of Chambers J in R v Archer, unreported, Tauranga AP21/99, judgment 5 August 1999.We will leave for another day the question of principle which this approach involves as we do not have either Chambers J's decision or the point at issue squarely before us.

[21] But in the present case, as the Judge noted, there was no specific evidence as to the amount involved or as to the reasons or justification for the expenditure in issue.The Judge ultimately indicated that he would proceed on the basis that Mr Shepherd had incurred "quite substantial costs".To put a figure on it, the Judge said, would be speculative.In present circumstances we consider that to add some undefined amount to the amount involved in the proved frauds was inappropriate.The point was not squarely before the sentencing Court, nor was there sufficient evidence, as the Judge himself indicated, to come to any determination as to the level and justification for the expenditure.To penalise Mr Holdgate on the basis of an amount above the level proved and indeed alleged seems problematic.The Judge's discussion of the other cases referred to him at sentencing suggests that he was treating Mr Holdgate's present offending as involving significantly more money than the amount alleged and proved.The Judge was, however, fully entitled to take into account the fact that the present offending started while Mr Holdgate was serving a suspended sentence for offending as a company director:see R v Holdgate CA14/98, judgment 18 March 1998.

[22] The Judge traversed the relevant factors of the present offending and gave consideration to the submissions which had been made to him on Mr Holdgate's behalf.We are, however, of the view that the sentence imposed does not sit easily with cases in which professional people have been sentenced for dishonesty offending at this general level.Against that there is here the overlay that the offending took place in an admitted environment of trying to conceal the true position from the Official Assignee and the creditors.

[23] The arrangements between Mr Holdgate and Mr Shepherd were very loose and although he was dishonest in what he did Mr Holdgate can claim with some justification that his successful fulfilment of contracts well outside Mr Shepherd's normal range worked very much to the latter's financial advantage, albeit according to the Victim Impact Statement there does not now seem to be much which Mr Shepherd has to show for it.

[24] All in all, the case is an unusual one.Having given the submissions made to us by both Mr La Hood and Mr Pike careful consideration, we are in the end brought to the conclusion that the term of 3½ years was manifestly excessive.

Conclusion

[25] For the reasons given the appeal against the convictions is dismissed. The appeal against sentence is allowed.The concurrent sentences of 3½ years are quashed.In their place the appellant is sentenced to concurrent terms of imprisonment for 2½ years on each of the counts involved.

Solicitors

Sladden Cochrane & Co, Wellington, for Appellant

Crown Law Office, Wellington