Edwards v United States of America [2002] NZCA 165; [2002] 3 NZLR 222 (15 July 2002)

Last Updated: 16 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA6/02

	BETWEEN	DALMA SYLVESTER EDWARDS
		Appellant

	AND	UNITED STATES OF AMERICA
		Respondent

Hearing:	27 June 2002
Coram:	Keith J Fisher J Paterson J
Counsel:	J R Billington QC and C A Podwin for the Appellant J C Gordon and M A Soper for the Respondent
Judgment:	15 July 2002

JUDGMENT OF THE COURT DELIVERED BY KEITH J

A request for extradition

[1] On 19 July 2001 the Embassy of the United States of America in Wellington in a diplomatic note to the New Zealand Ministry of Foreign Affairs and Trade formally requested the extradition of the appellant, Dalma Sylvester Edwards. The request was made by reference to the Extradition Treaty between the two countries of 12 January 1970. (The text is scheduled to the Extradition (United States of America) Order 1970 SR 1970/240.)
[2] The basic obligation under the Treaty is set out in article I:

Each Contracting Party agrees to extradite to the other, in the circumstances and subject to the conditions described in this Treaty, persons found in its territory who have been charged with or convicted of any of the offences mentioned in Article II of this Treaty committed within the territory of the other.

[3] That obligation reflects the desire of New Zealand and the United States of America, as stated in the preamble to the Treaty, “to make more effective the cooperation of the two countries for the reciprocal extradition of offenders”.
[4] The extradition of the appellant is sought so that he may stand trial on six counts including theft of government property. The first count included in the indictment is as follows:

From on or about January 22, 2001 through in or about May 2001, the exact dates being unknown, in the Eastern District of Virginia and elsewhere, defendant DALMA S. EDWARDS, a/k/a “Mike Edwards”, did knowingly and wilfully embezzle, steal, purloin, and convert to his use and the use of another any money and thing of value of the United States and the United States Postal Service, an agency of the United States, having a value in excess of $1,000, namely, $679,700 mistakenly paid by the Postal Service to the defendant’s business, Air Atlantic, by check (#0300776082) dated January 11, 2001.

(In violation of Title 18, United States Code, Sections 641 and 2).

(emphasis added)

[5] Title 18 United States Code s641 reads as follows:

TITLE 18, UNITED STATES CODE,

SECTION 641. Public Money, Property or Records

Whoever embezzles, steals, purloins, or knowingly converts to his use or the use of another, or without authority, sells, conveys or disposes of any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof; or

Whoever receives, conceals, or retains the same with intent to convert it to his use or gain, knowing it to have been embezzled, stolen, purloined or converted –

Shall be fined under this title or imprisoned not more than ten years, or both; but if the value of such property does not exceed the sum of $1,000, he shall be fined under this title or imprisoned not more than one year, or both.

The word “value” means face, par, or market value, or cost price, either wholesale or retail, whichever is greater. (emphasis added)

[6] Section 2 of Title 18, which is referred to in five of the six counts, deals with principals and parties to offences:

TITLE 18, UNITED STATES CODE,

SECTION 2. Principals

(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
(b) Whoever wilfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.
[7] Article II of the Treaty provides in part:

Extradition shall be granted, in accordance with the provisions of this Agreement, in respect of the following offences:

. . .

12. Robbery; assault with intent to rob.

13. Burglary; housebreaking or shopbreaking.

14. Larceny.

15. Embezzlement.

16. Obtaining property, money or valuable securities by false pretences or by conspiracy to defraud the public or any person by deceit or falsehood or other fraudulent means, whether such deceit or falsehood or any fraudulent means would or would not amount to a false pretence.

17. Bribery, including soliciting, offering and accepting.

18. Extortion.

19. Receiving and transporting any money, valuable securities or other property knowing the same to have been unlawfully obtained.

20. Fraud by promoter, director, manager or officer of any company, existing or not.

. . .

Extradition shall also be granted for attempts to commit, conspiring to commit, or participation in, or inciting, counselling, or attempting to procure any person to commit, or being an accessory after the fact to, any of the offences mentioned in this Article.

Extradition shall also be granted for any offence of which one of the above listed offences is the substantial element, when, for purposes of granting jurisdiction to the United States Government, transporting or transportation is also an element of the specific offence.

The District Court ruling of eligibility for extradition

[8] Judge Mathers in the District Court in Auckland, before whom the request for extradition came, summarised the facts in this way:

[3] The indictment alleges that on 11 January 2001 the United States Postal Service (USPS) mistakenly issued a cheque for the sum of US$679,000.00 payable to Air Atlantic, Mr Edwards’ company, when the cheque should have been paid to another company. It is said that after the cheque cleared and the funds were deposited into two separate accounts, Mr Edwards and the company received notice of the mistaken payment in a number of ways. More particularly, it is said that in February and March 2001 an USPS special agent Cloninger notified Mr Edwards by telephone and in writing that the money should be returned.

[4] Despite being aware of the mistake on 22 January 2001 [which was the day the cheque was cleared and the funds became available to the Air Atlantic accounts], Mr Edwards, it is said, began spending and/or converting to his own use the money. It is alleged that Mr Edwards engaged in a scheme to mislead the USPS into believing that the funds would be repaid by transferring the money between accounts and by opening new accounts. Further, it is said that Mr Edwards misled investigators as to his whereabouts and on 12 March 2001 arranged for the sum of US$250,000.000 and the sum of US$220,000.00 to be transferred via the Bank of New York, to an account specified by him at the National Bank of New Zealand.

[9] The request for extradition was supported by the documents required by article X of the Treaty and by s18(4) of the Extradition Act 1999.
[10] In the District Court, Mr Edwards’ counsel (who did not appear in the High Court or in this Court) conceded that the offence contained in count 1 of the indictment is an extradition offence within the meaning of the Treaty and that, of the other five counts, four (two concerning using wire communications in furtherance of a scheme to defraud and obtain money by false pretences, and two of moving the proceeds of crime outside the United States to conceal and disguise them) were related to count 1. He also conceded that the evidence that had been produced established a prima facie case as required by s22 of the Act (and it might be added article IV of the Treaty). The only argument made against eligibility for surrender was that the Court should exercise the discretion conferred by s8 of the Act to refuse surrender on the basis that the accusation was not made in good faith in the interests of justice. The Judge, assuming that the ground was available, found that on the facts it was not made out. Accordingly she ruled that Mr Edwards was eligible for surrender. She recorded that counsel for the United States accepted that count 6 was not an extradition offence. Under s26(1)(a) of the Act, the Judge issued a warrant for the detention of Mr Edwards pending his surrender to the United States or discharge according to law in respect of counts 1-5.

Judicial review is sought

[11] Mr Edwards then sought judicial review, in the end only on the ground that the District Court Judge erred in law in finding that the applicant had committed an extradition offence in that the Judge failed to consider the provisions of s4 of the Act and article II of the Treaty. He did not exercise his right to appeal to the High Court on a point of law under part 8 of the Act, but counsel for the United States made no point about that.
[12] The statement of defence to the application for judicial review said that the appellant’s conduct fell within article II, “specifically clauses 14, 20 and 16”. It also pleaded the appellant’s concession relating to count 1 and counts 2-5 (para [10] above).
[13] Salmon J in the High Court said that although Mr Williams’ counsel had conceded in the District Court that the evidence established an extradition offence that was a question of law and if the concession was in error the High Court was entitled to review. He set out relevant provisions of the Act including one of its objects – to enable New Zealand to carry out its obligations under extradition treaties (s12(a)). He then quoted article I of the Treaty (para [2] above) and mentioned that article II listed 32 offences of which the United States, he said, relied upon “offence 14 ‘larceny’ and offence 20 ‘fraud by promoter, director, manager or office of any company existing or not’ ”. The Judge summarised counsel’s argument. Counsel for Mr Edwards contended that theft by conversion (eg s220 of the New Zealand Crimes Act 1961) was not larceny and that the fraud in cl 20 had to be present at the time of receipt. For the United States, counsel cited decisions about the “correct approach to the interpretation of treaty legislation”, noting that the offences in article II are described by generic description rather than with the particularity of statute.
[14] The Judge agreed with that latter approach which, he said, was supported by s4(2) and s5(2) of the Extradition Act. The former is as follows:

4 Meaning of “extradition offence”

(2) The condition referred to in subsection (1)(a) [which provides part of the definition of “extradition offence”] is that if the conduct of the person constituting the offence in relation to the extradition country, or equivalent conduct, had occurred within the jurisdiction of New Zealand at the relevant time it would, if proved, have constituted an offence punishable under the law of New Zealand for which the maximum penalty is imprisonment for not less than 12 months or any more severe penalty.

For Salmon J, the support for the interpretive approach he was adopting came from the reference to “the conduct of the person”. (The application of s4(2), incorporating the principle of double criminality, to the United States extradition treaty was not in issue before us and we make no comment on it.)

[15] Section 5(2) reads:

5 Interpretation provisions relating to offences

(2) In making a determination for the purposes of section 4(2), the totality of the acts or omissions alleged to have been committed by the person must be taken into account and it does not matter whether under the law of the extradition country and New Zealand—

(a) The acts or omissions are categorised or named differently; or

(b) The constituent elements of the offence differ.

[16] The Judge considered that he should not focus on the particular national definitions of offences. It was necessary to look for a definition of larceny which would be understood by those who drafted and signed the treaty. For that purpose he quoted definitions of larceny included in English and American dictionaries and in Stroud’s Judicial Dictionary and concluded:

[32] Thus the dictionary definitions in both Treaty countries describe larceny as the unlawful taking of property with the intention of depriving the rightful owner of it permanently and Stroud contains a similar definition.

[33] In my view it is not appropriate on an application for extradition to analyse the offence in the detailed way undertaken by Mr Billington, but rather to consider whether the offence listed in the Extradition Treaty can be properly understood to refer to the crime alleged and then to consider whether the facts (i.e. the conduct) relied upon to support the charge would, if proved, establish the existence of the crime. Bearing in mind that the word “larceny” must be used in a sense in which it can be understood in both Treaty countries, I conclude that the word “larceny” is apt to describe count 1 in the indictment whichever part of s641 is ultimately relied upon by the prosecution.

[17] It was accordingly unnecessary to consider whether offence 20 (fraud by promoter . . .) was relevant.

The arguments on appeal

[18] On appeal, the written submissions were essentially directed to the larceny and fraud headings although those for the United States stated that Mr Edwards’ submissions accepted that the offences would fall within heading 15 – embezzlement.
[19] Mr Billington, counsel for Mr Edwards, certainly did not accept that proposition at the hearing of the appeal. At the hearing, the parties essentially divided on the question whether the offences, and notably count 1, came within the heading of embezzlement. Mr Billington rightly accepted that this Court was able to assess the extradition request against item 15 – embezzlement – notwithstanding the way the case had been pleaded and argued in the courts below. Ms Gordon, counsel for the United States, could not explain why the embezzlement item had not been invoked at the earlier stages.
[20] Mr Billington submitted that a three-way distinction was to be made between larceny, embezzlement and conversion to one’s own use. The primary count in this case came only under the third which was not an extradition offence. That distinction was supported by the wording of 18 USC s641 – “embezzles, steals, purloins, or knowingly converts to his use or to the use of another ...” – and by the cases on that provision. Larceny, as indeed was indicated by some but not all of the dictionary definitions on which Salmon J relied, was limited, in his submission, to the unlawful taking away of a person’s property with intent to deprive the rightful owner of it permanently. United States authority determines that larceny requires wrongful taking and carrying away (asportation) of personal property of another with fraudulent intent to deprive the owner of his property without his consent (US v Barlow [1972] USCADC 184; 470 F 2d 1245, 1251 (1972, CADC)). On the facts of this case, in counsel’s submission, the money came into the bank account under Mr Edwards’ control without any wrongdoing on his part.
[21] That temporal defence was not available in respect of embezzlement. Again, to cite American authority, the property in the case of embezzlement comes lawfully into the possession or care of the defendants who then fraudulently appropriate the property to their own or others’ use (US v Burton [1989] USCA11 654; 871 F 2d 1566 (1989, CA11)). According to Mr Billington the significant further element in the definition of embezzlement is that the appropriation must be in breach of trust or fiduciary relationship. While some dictionaries include that element and there is American authority at the District Court level which may support it (eg US v Powell 94 F Supp 1353 (1968, EDVA) affirmed [1969] USCA4 393; 413 F 2d 1037), that case is equivocal and the relevant pages of the United States Code Annotated to which we were taken cite several cases which simply require the fraudulent appropriation of property which has come lawfully into the hands of the defendant. The United States Supreme Court so held as long ago as 1895 : Moore v US [1895] USSC 267; 160 US 268, 269 (1895), see also US v Davila [1982] USCA10 259; 693 F 2d 1006, 1007-1008 (1982, CA 10), and Treadwell v US 266 F 350, 352 (1920, CCA 4) .
[22] By contrast to embezzlement, the offence of conversion, in Mr Billington’s submission, does not require a breach of trust or of a fiduciary relationship. Because of that difference, the offence of conversion has a distinct rationale. We would however point to a distinction between embezzlement (and larceny as well), on the one side, and conversion, on the other, which is well established in American and indeed other authority. The distinction relates to the intention to deprive the owner of the property permanently. As with the offence of car conversion introduced into New Zealand law in 1935, it is enough to establish the conversion offence under 18 USC s461 to prove intentional and knowing abuse or unauthorised use of the property although there is no intent to keep the property for personal use : US v Fogel [1990] USCA4 882; 901 F 2d 23, 25-26 (1990 CA 4). That is of course not our case.
[23] For Mr Billington it followed from his analysis that the crimes alleged against Mr Edwards did not come within the extradition offences of larceny because money came into his possession without any unlawful act on his part nor of embezzlement because he did not act in breach of trust or of a fiduciary relationship. We recall that much US federal authority on the crime of embezzlement does not require a trust or fiduciary relationship. We do not however decide the case simply on that basis since that would give inappropriate significance to the national law of one party – and indeed to a disputed view of the law applied in just one of the more than fifty American jurisdictions. A majority of those jurisdictions, in response to the work of the American Law Institute in preparing the Model Penal Code, especially since 1962 when the proposed official draft was published, have abolished the distinctions and adopted comprehensive consolidations of the law of theft. The principal Model Law definition covers theft by unlawful taking or exercise of control over property of another with the purpose of depriving that person of it. The definition, covering what was embezzlement as well as larceny contains no element at all of any breach of trust or fiduciary relationship (see American Law Institute, Model Penal Code and Commentaries part II (1980) article 223 (Theft and Related Offenses) especially 122-123, 125-178 (article 223.1 and 2) and 270-277 (article 223.9 : unauthorized use of vehicle)). See similarly La Fave and Scott Criminal Law (2d ed 1986) ch 8.4-8.6.
[24] Ms Gordon, for the United States, contended that what was called for was a liberal natural interpretation of the offences described in article II and a comparison between that interpretation and the count or charge laid in the requesting country. The Court is not required to define the article II offences by reference to a specific statutory provision of New Zealand or the United States. The descriptions or categories of the offences in article II are generic and do not relate to specific offences. Counsel supported the High Court’s conclusion that the charge in count 1 is the offence of larceny in article II; counts 2-5 also fell within the generic description of the offence. In addition, she depended on the embezzlement and fraud by a promoter heads.

The approach to interpretation

[25] We begin with the approach to be adopted to the interpretation of extradition treaties. We were referred to the statements made by Lord Russell of Killowen in In re Arton (No 2) [1896] 1 QB 509, 517, and often cited since, for instance at the beginning of this passage from the judgment of Lord Bridge of Harwich in R v Governor of Ashford Remand Centre, ex parte Postlethwaite [1988] AC 924, 947:

In my judgment those treaties ought to receive a liberal interpretation, which means no more than that they should receive their true construction according to their language, object, and intent.

I also take the judgment in that case as good authority for the proposition that in the application of the principle the court should not, unless constrained by the language used, interpret any extradition treaty in a way which would “hinder the working and narrow the operation of most salutary international arrangements”. The second principle is that an extradition treaty is “a contract between two sovereign states and has to be construed as such a contract. It would be a mistake to think that it had to be construed as though it were a domestic statute:” Rev v Governor of Ashford Remand Centre, Ex parte Beese [1973] 1 WLR 969, 973 per Lord Widgery CJ. In applying this second principle closely related as it is to the first, it must be remembered that the reciprocal rights and obligations which the high contracting parties confer and accept are intended to serve the purpose of bringing to justice those who are guilty of grave crimes committed in either of the contracting states. To apply to extradition treaties the strict canons appropriate to the construction of domestic legislation would often tend to defeat rather than to serve this purpose.

(That passage is repeated or referred to in the recent extradition decision of the House of Lords in R(Al-Fawwaz) v Brixton Prison Governor [2002] 1 AC 556, 574, 581, 593 and 597).

[26] The comment might be allowed that the differences suggested thirty or more years ago between the interpretation of domestic legislation and the interpretation of treaties might not now be seen in such sharp terms. Whether that is so or not, the approach to the interpretation of treaties now stated in the Vienna Convention on the Law of Treaties and generally considered to be declaratory of customary international law (for instance by Lord Diplock in Fothergill v Monarch Airlines Ltd [1980] UKHL 6; [1981] AC 251, 282-283) appears to be broadly to the same effect. Under article 31(1)

A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

[27] We see no reason why that “general rule of interpretation” should not be equally applicable to extradition treaties. That approach provides one reason why it is not appropriate to limit the terms of article II by tying them exclusively to the detail of national definitions. So too do the facts that over the life of an extradition treaty (and they tend to have long lives) national definitions will alter; that, in the case of the United States, the treaty is to apply to the criminal law of more than 50 jurisdictions and that, even on the New Zealand side, the treaty applies also to the Cook Islands, Niue and Tokelau; and that if attention were to move from United States jurisdictions to New Zealand we would be considering provisions of a criminal code which well over a century ago, and in anticipation of the steps taken some decades later in most American jurisdictions, did away with the “vast technicality” of the distinction between larceny and embezzlement. Following the proposal of James Fitzjames Stephens and his colleagues on the English Criminal Code Commission (1879) the New Zealand Criminal Code of 1893 abolished that distinction and defined “theft or stealing” as the act of fraudulently and without colour of right either (1) “taking” or (2) “converting to the use of any person” property with certain stated intents (see now Crimes Act 1961 s220(1)). It was made clear, as well, that there is no requirement of a breach of trust or a fiduciary relationship although that element had been found in early particular legislative extensions of theft law. For the Code Commissioners it was, for instance, objectionable that a finder of goods was not criminally liable for fraudulent conversion of the goods under the numerous, difficult, elaborate and intricate statutory extensions of the common law of larceny. The technical exceptions were to be swept away (Report of the Criminal Code Bill Commission (1897) 27-28, 115-116). The offence alleged in count 1 would be theft, pure and simple, under New Zealand law.

Its application to the facts

[28] But to repeat, our task is not to reach a decision solely under the law of one particular jurisdiction. Rather, it is to determine whether the counts as charged do fall within the ordinary meaning of items 14, 15, 16 and 20 in their context and in the light of the Treaty’s purpose and object. A primary purpose, emphasised for us by s12(a) of the Act, must be to fulfil New Zealand’s obligations under the Treaty. It is not however a matter of simply using dictionary definitions which, in any event, differ and which must be affected by context. Part of the critical context is that the terms are commonly used for legal purposes, they have legal meanings, even if again those meanings may vary in detail, and the members of the delegations of the two countries who in 1970 prepared the list of property offences included in items 12-20 of article II would have been fully aware of that general legal usage.
[29] In our view, the generally understood meanings of larceny and embezzlement, where both are used together in a list of serious property offences as they are in this Treaty, provide a clear conclusion in relation to the conduct which is the subject of count 1. We return to the indictment and the supporting documents filed in accordance with the Treaty and the Act. Count 1 alleges that the offending began on 22 January 2001, the date when the money mistakenly put into the Air Atlantic accounts became available to the company and accordingly to Mr Edwards. It is alleged that he knew on that date that the money had come from USPS and accordingly he knew at the moment he received it that he had no right to it. On that basis the count comes even within the narrower understanding of larceny reflected in the cases under the United States Code. If, however, the wrongful action or appropriation occurred later and accordingly did not fall within that narrow understanding of larceny it plainly fell within the ordinary meaning of embezzlement : on the facts alleged, if Mr Edwards did not wrongly take the property away from USPS at the outset, he later wrongly appropriated property which was not his and which had come into his possession by error. We can see no reason at all to introduce the element of breach of trust as a necessary condition. As we have seen, it is not to be found as a common or even a prominent feature in the law of embezzlement and certainly not of the general law of theft. The total set of property offences in items 12-20 of article II appears to be designed to provide broad coverage and not to allow for such a refinement.
[30] One possible question, raised from the bench, remains. It is whether at the point of subsequent appropriation the account was a “money and thing of value of the United States”. The question, which was not pursued, might lead into the question whether (under federal banking law or Virginian law?) the United States or the USPS had any property interest in the money once it had been deposited in Air Atlantic’s bank account. Again, given the broad purpose of the Treaty and the generic scope of “embezzlement”, we do not see that possible refinement as having any place in the application and operation of the Treaty.

Conclusion

[31] We accordingly conclude that the conduct alleged in count 1 is an extradition offence under item 14, item 15 or both. There was no reviewable error of law made in the District Court in that respect.
[32] So far we have scarcely referred to counts 2-5. The warrant for detention pending surrender applies to them along with count 1. In the District Court counsel for the appellant accepted that those counts were related to count 1. The High Court judgment does not indicate that that linkage was challenged and the reasoning in it is limited to count 1 (see para [33] of the judgment quoted in para [16] above).
[33] There was also no attempt in this Court to argue that the linkage between counts 2-5 and count 1 does not exist. There has been no showing of any error of law in the District Court judgment in that respect. Further, those counts appear to allege extradition offences in terms of the final paragraph of article II read with items 14 and 15, and possibly item 19.

Result

[34] The appeal against the dismissal of the application for judicial review is dismissed. The High Court left it to the parties to make submissions on costs in that Court if they wished. No submissions were made to us about costs, but, if counsel wish, they may file memoranda on the matter.

Solicitors
Kevin Ogles & Associates, Auckland for the Appellant
S J Eisdell Moore, Auckland for the Respondent