THE QUEEN v ROBERT JAMES COUSINS [2002] NZCA 304 (4 December 2002)

IN THE court of appeal of new zealand

CA 276/02

THE QUEEN

V

ROBERT JAMES COUSINS

Hearing:	20 November 2002
Coram:	Anderson J Williams J Baragwanath J
Appearances:	G J Newell for Appellant B J Horsley for Crown
Judgment:	4 December 2002

judgment of the court DELIVERED BY BARAGWANATH J

Introduction and result

[1] The appellant was convicted by a jury in the District Court at Auckland on 5 July 2002 of 11 counts of using a document capable of being used to obtain a pecuniary advantage with intent to defraud.He appeals against conviction and against the term of eight months imprisonment imposed concurrently on all charges with an order giving leave to apply for home detention.

[2] For reasons that will be stated shortly we are satisfied that, despite an impeccable summing up, the Judge's direction to the jury in response to a question on the second day of their deliberation entailed such risk of conveying a false message as to the essential element of fraud that the convictions cannot stand.Other grounds of challenge to the convictions are without merit and we did not call upon the Crown to respond to them. The appeal against sentence does not require decision.

The allegations and the essential issue

[3] The charges covered a period between November 1995 and May 1996 and alleged that the appellant used documents showing false odometer readings for 11 motor vehicles the appellant had bought in Japan for his company, Elgin Motors Limited.The crucial element, of intent to defraud, depended on proof that the appellant knew the odometer readings to be false having been wound back from the true reading or "clocked".

[4] The Crown case was that during the relevant period the appellant regularly travelled to Japan to inspect and buy at auction vehicles for importation to New Zealand.It contended that the appellant through an agent bought the vehicles at auction knowing their true odometer readings.It contended that the appellant arranged for the odometers to be wound back so the subsequent importation documentation reflected the false odometer readings.The offending alleged by the Crown was the use of such documents for the purpose of sale of the vehicles in New Zealand.

[5] The appellant gave evidence at trial denying knowledge that the odometers had been tampered with and claiming that he had not had the opportunity to verify the odometer readings himself.He claimed he bought the vehicles directly from his agent and did not himself attend at the auction houses when the vehicles were purchased.His position was that he was not the perpetrator but the victim of fraud.

[6] The essential issue for the jury was whether they accepted the Crown's submission that the appellant must have known of the true readings and therefore acted with dishonest intent when using the documents with lower odometer readings at the time of its re-sale by his company in Auckland.

[7] Before considering that issue it is convenient to clear away the other two grounds of appeal.

The submission that non-expert evidence was wrongly admitted

[8] The Crown called a motor vehicle dealer who recounted dealings with the appellant's Japanese agent.In cross-examination defence counsel opened a line of questioning about that agent and his conduct.The appellant took exception to some of the answers that the witness gave in reply.We are satisfied that the responses complained of, which contained allegations that the agent had destroyed documents, were elicited and must be accepted as the result of the manner in which the defence elected to conduct the case.

The challenge to the production unedited of the contents of the agent's floppy disk

[9] The evidence included a hard copy printout of the contents of a floppy disk seized by the Japanese authorities from the premises of the appellant's agent in Japan.The information recorded is illustrated by the following extract, comprising entries in relation to one transaction on 19 December 1995 involving a Bluebird vehicle which was not "clocked", and another on 21 December relating to a Pajero which was, and was the subject of count 1.

E L G I NM O T O R SL T D
	NAME	Price	OIL	SALES PRICE
12/19	BLUEBIRD 4HT3S 4WD	138,000	0	138,000	74 OK
12/21	PAJERO XL T LONG	543,000	50	548,000	99-69

[10] Under the column headed "price" is the price charged to Elgin Motors Limited before clocking took place.When that occurred there was an entry under the heading "oil" of "50", standing for 5,000 yen.The addition of that figure to the price appeared under the next heading "sales price".In the final column where there had been no clocking appeared the first two figures of the kilometre reading and the letters "OK".Where clocking had occurred there was shown both the original figure, in the case of the Pajero 99,000 (kilometres), and the wound back reduced figure 69,000.That pattern was repeated in respect of the 10 other transactions giving rise to the remaining counts faced by the appellant.

[11] The defence did not dispute that insofar as the entries in the hard copy related to the 11 transactions the subject of the counts it was properly admissible pursuant to s3(1)(b)(iii) of the Evidence Amendment Act (No 2) 1980 which provides:

Admissibility of documentary hearsay evidence

3 (1)...in any proceeding where direct oral evidence of a fact or opinion would be admissible, any statement made by a person in a document and tending to establish that fact or opinion shall be admissible as evidence of that fact or opinion if -

...

(b) The document is a business record, and the person who supplied the information for the composition of the record -

...

(iii) Cannot reasonably be expected (having regard to the time that has elapsed since he supplied the information and to all the other circumstances of the case) to recollect the matters dealt with in the information he supplied; or

...

[12] The learned Judge was called upon following the Crown's opening to rule on a defence objection to the admission of the 27 unexpurgated pages of the hard copy on the ground that there should have been deleted from it all transactions save those relating to the 11 motor vehicles which were the subject of counts. Concern was expressed by the defence both before the Judge and in argument in this Court that the document showed instances of apparent clocking in terms of the final column in relation to numerous transactions other than those the subject of charges.It was contended that such evidence was prejudicial and unfair, and so ought to have been excluded in exercise of the Court's discretion under s18 of the Evidence Amendment Act which provides:

Power of Court hearing appeal

18 Notwithstanding section... 3... of this Act, where the proceeding is with a jury, the Court may, in its discretion, reject any statement that would be admissible in the proceeding under any of those sections, if the prejudicial effect of the admission of the statement would outweigh its probative value, or if, for any other reason, the Court is satisfied that it is not necessary or expedient in the interests of justice to admit the statement.

[13] We accept that the hard copy contained numerous examples of apparent clocking that were not the subject of counts.Counsel told us that neither Crown nor defence made reference to the other items but they were in the exhibit and could have been the subject of adverse inference by the jury.

[14] Mr Newell submitted that the hard copy should have been edited so as to excise all entries other than the 11 the subject of counts.His objection was on the ground of unreliability of transactions indicating clocking that were not, unlike the 11 that were the major focus of the trial, backed up by other documentation that corroborated the fact of the clocking.

[15] But there is no substantial reason to distinguish between the entries relating to the 11 and the remainder. The evidence that the floppy disk had been seized from the premises of the appellant's agent did not point to difference in reliability from entry to entry. The document comprised an entire "trade record", the whole of which purported to recount particulars of transactions between the appellant's agent and his company.To the extent that the evidence was inculpatory that was a function of its character as a record. The fact that it tended to establish a greater extent of clocking than had been charged did not render the balance of its contents inadmissible: the prejudice that could result from it derived from its probative force in recording transactions between the agent and the appellant's company, not from extraneous material of some different and improperly prejudicial character.There was therefore no occasion for any balancing of irrelevantly prejudicial material against that properly probative information.There is nothing in the point.

The direction in response to the jury question as to intent to defraud

[16] The summing up had concluded at 3 pm on 4 July 2002.The jury had not completed their deliberations by 8.30 pm when they retired for the night.They resumed deliberation the following morning.We reproduce with added numbers the record of the Judge's response just before 11 am on 5 July to the jury's question:

Members of the jury you have asked a question which is that if Mr Cousins had reasonable cause to suspect that the cars were clocked is that sufficient to infer knowledge of clocking.

[1] I think the first thing I will say to you is remember what you are looking for here is criminal intent.

[2] Use your own common sense when considering yourselves in the same position and then approach it perhaps from a different angle which is that first of all find all the facts that you know, if you find Mr Cousins was aware of it then, from those facts, you can draw the inference that he had that knowledge.

[3] Mere suspicion on his part would not be enough.

[4] If you as the jury consider that the information that he did have was such that no [5] reasonable person could deny knowledge, and if you think that he has deliberately failed to pursue enquiry for fear of learning the truth, [6] or if he is [un]able to deny knowledge, then your conclusion could justifiably be drawn that he had a fraudulent state of mind when he made use of these documents, knowing that a false mileage was there.

[7] In summary mere suspicion is not enough but if the facts he was aware of, in your opinion as a jury, was such that really no reasonable person could deny knowledge in the fact of those facts, then you can infer a guilty mind from that.

I acknowledge it is a difficult area but that is the best we can do, our joint efforts, so I will ask you now to reconsider.

[17] The Judge had the previous day correctly directed the jury:

...In respect of each of the charges you do need to be satisfied that there was a fraudulent and dishonest use of a document.In this case, that involves you being satisfied beyond reasonable doubt that Mr Cousins knew that these vehicles were clocked and hence knew, when the documents were generated, that he was presenting false and fraudulent documents... The sole issue... is whether or not Mr Cousins knew, at the time of using the various documents, that the odometer was clocked.

[18] In the present context the passage we have underlined could not be improved upon.It was a concise and accurate application of the principle stated by this Court in R v Speakman (1989) 5 CRNZ 250, 258 which held that for the purposes of s229A(b) of the Crimes Act:

...what is required is proof that the accused acted deliberately, and with knowledge that he was acting in breach of his legal obligations; and that he did so without honest belief that he was entitled so to act.

[19] The Crown had presented circumstantial evidence from which it invited the jury to draw the conclusion that the appellant had been a party to the clocking and must therefore have known of it.

[20] The jury had understood the correct direction the previous day that knowledge of clocking was the issue.They sought guidance whether reasonable cause to suspect clocking was enough to prove such knowledge.

[21] Unhappily the jury's question

If Mr Cousins had reasonable cause to suspect that the cars were clocked is that sufficient to infer knowledge of clocking?

was potentially ambiguous.It was capable of meaning what is the legal test - is reasonable cause to suspect sufficient in law to constitute knowledge of clocking?It could also possibly have meant - is it open to us as a matter of fact to determine that knowledge is proved beyond reasonable doubt from the facts known to the appellant?

[22] The answer to the jury's question as potentially one of law should have been a plain "no", whatever further explanation was also given.Failure to give such a direct answer ran the risk of misapprehension of what the law requires.

[23] As in a summing up so in answering a jury's question a sharp distinction is needed between the question of law of what the Crown must prove - here knowledge of the clocking, on which a clear direction was needed and was initially given; and the question of fact, which was for the jury, namely whether that knowledge had been proved.To introduce into the direction of law concepts of reasonableness or failure to pursue enquiry risked leaving the jury with an impression that the law will accept less than proof of actual knowledge.

[24] It would have been permissible to extend "knowledge" to include "belief". As observed in R v Crooks [1981] 2 NZLR 53, 56:

...A person is said to "know" something when he has ascertained, by physical or mental perception, a state of facts or circumstances which creates in his mind a certainty that the point of his inquiry is free from doubt.If this were the test of criminal liability for the crime of receiving, then the only sure method of proof would be to establish that the suspected receiver actually saw the goods being stolen.It was for this reason that the word "knowing" came to be treated in the common law concept of receiving as including "believing".An early pronouncement on the point occurs in the charge to the jury by Baron Bramwell in R v White [1860] EngR 222; (1859) 1 F & F 665; 175 ER 898, where the indictment was for receiving stolen goods:

"The knowledge charged in this indictment need not be such knowledge as would be acquired if the prisoner had actually seen the lead stolen; it is sufficient if you think the circumstances were such, accompanying the transaction, as to make the prisoner believe that it had been stolen."

This statement of the law was adopted thereafter not only in England but in various Commonwealth jurisdictions, including Canada, Australia and New Zealand...

[25] But it was not permissible in what appeared to be a direction of law to introduce concepts of reasonableness or failure to pursue enquiry. The judgment in R v Crooks at pages 57-9 discusses the authorities (we have emphasised the essential passages):

...the test of guilty knowledge is necessarily subjective, and so in Atwal v Massey [1971] 3 All ER 881 (DC) it was held a misdirection for the jury to be told that the circumstances were such that they could hold that the accused ought to have realised the dishonest origin of the property.In other words, a direction based on failure to make inquiries might easily be misunderstood by a jury as meaning that the defendant would be liable if a reasonable person in his situation would have made an inquiry.

In R v Griffiths (1974) 60 Cr App R 14 the Court of Appeal (Criminal Division) considered this frequently debated situation of an accused person proved to have suspected the dishonest origin of the goods received but who "turned a blind eye".At p 18 the Court had this to say:

"To direct the jury that the offence is committed if the defendant, suspecting that the goods were stolen, deliberately shut his eyes to the circumstances as an alternative to knowing or believing the goods were stolen is a misdirection.To direct the jury that, in common sense and in law, they may find that the defendant knew or believed the goods to be stolen because he deliberately closed his eyes to the circumstances is a perfectly proper direction."

[26] We interpolate that the last sentence is potentially misleading, and may have caused the error in the next authority cited.That is because a jury might take from it a direction of law, rather than what was no doubt intended - a comment on the kind of considerations the jury might take into account in performing their function of appraising the facts to decide whether the legal test was satisfied.The citation from Crooks continues:

Then there came the decision of the Court of Appeal (Criminal Division) in R v Smith (1976) 64 Cr App R 217.In that case the jury had been directed as to the meaning of the phrase "knowing or believing" as appearing in s 22(1) of the Theft Act 1968.The trial Judge had said:

"The minimum that the prosecution have to prove is this; (1) Reasonable grounds on the part of the defendant for suspecting the goods were stolen.(2) if, those reasonable grounds being present, that he did suspect that they were stolen or that they may be stolen and, (3) After suspecting that they were or may be stolen, showing wilful blindness to that suspicion" (ibid, 218).

This was held to be a misdirection.The trial Judge had said that if the facts which he had numbered (1) to (3) were proved, then "belief" had been established, but this was contrary to the decision in R v Griffiths.If the three facts referred to by the trial Judge had been proved then it was open to the jury to infer "belief" from those facts.But it was wrong to say that proof of those facts amounted in law to proof of "belief".

The point is the distinction between the issue of law and how the jury might approach their task of fact-finding.Crooks continued:

There is another aspect of the decision in R v Smith which in our opinion is of considerable significance.The judgment of the Court of Appeal was delivered by Lawton LJ, and he emphasised that the Court did not approve of attempts by trial Judges to give juries guidance as to what was meant by "believing".As he pointed out, the word is one of ordinary usage.Its meaning would be understood by any jury.Then, at p 220 of the report, Lawton LJ summarised these views by saying:

"We are satisfied that except in most unusual cases juries are capable of understanding what is meant by the word 'believing' in section 22 of the Theft Act 1968.Phrases such as 'suspecting that the goods were stolen and then wilfully shutting one's eyes to the obvious' should not be used as a definition of 'believing'."

The Court in Crooks went on to state:

Where the circumstances create suspicion alone, then a defendant is not to be held accountable because he failed to inquire.In such a case the desirable course is merely to direct the jury that the question is whether in their view the whole of the circumstances justify a conclusion that the defendant, beyond reasonable doubt, in fact believed when he received the property that it had been dishonestly obtained.The jury should not be directed that the failure to inquire may be used by them to elevate suspicion to proof of belief.

(emphasis added)

[27] It was held in Speakman (at p258) that, as summarised at paragraph [18] above, that statement of principle is of equal application to the element of "intent to defraud" in s229A(b).That is the standard against which must be examined the direction to which we now turn.The parenthetical references are to the numbers in para [16] above.

[1] In the first sentence of his answer the Judge directed the jury that:

What you are looking for here is criminal intent.

In fact, as the Judge had correctly directed the previous day, the issue was not of intent but of knowledge, or belief.He did not repeat his original lucid statement that the issue was of knowledge that the odometer was clocked.

[2] The next sentence about use of common-sense is not wholly clear:

...find all the facts that you know, if you find Mr Cousins was aware of it then, from those facts, you can draw the inference that he had that knowledge.

The "it" may be the fact of clocking but it is not plainly stated that actual knowledge (or belief) is essential.

[3] The next sentence about suspicion is correct.

[4] The next introduces a reference [5] to "reasonable person" which is something of a distraction when the issue is not reasonableness but honesty. The next phrase [6] "if you think that he has deliberately failed to pursue enquiries for fear of learning the truth" risks the misapprehension of the true test that led to the finding of misdirection in R v Smith.The next phrase "or if he is [un]able to deny knowledge, then your conclusion could justifiably be drawn that he had a fraudulent state of mind when he made use of these documents, knowing that a false mileage was there" is of course correct.

It was then however said

[7] "In summary mere suspicion is not enough but if the facts he was aware of... was such that really no reasonable person could deny knowledge in the face of those facts, then you can infer a guilty mind from that."

[28] It is necessary, as Mr Horsley correctly submitted, to recognise that this was an oral direction to lay jurors, and what matters is the impression it would have left them with.The issue is what they would have made of the answer to their question whether reasonable cause to suspect clocking is enough to justify knowledge of it.

[29] The difficulty is that the clear message of the previous day reflected in the jury's question, that knowledge must be proved, was blurred in the direction in reply. The references to "reasonable" instead of "honest" might perhaps have been acceptable in a carefully crafted direction that spelt out the difference between fact and law, stated the law with precision, and explained how in performing the factual appraisal a stage can come where a position is so unreasonable as to be incredible.But attempting such exercise, undertaken rather unsatisfactorily in Griffiths, was discouraged in Smith and in Crooks.That was for the good reason that a jury direction, given orally to lay people performing an unfamiliar and difficult task, must be simple and clear.There is much virtue in providing the essential legal directions in a short written direction that cannot be misunderstood.

[30] Here there was in our view real risk that the jury were distracted from the issue of actual knowledge or actual belief by the references to what a reasonable person would have make of the known facts.Those concepts, and that of failing to pursue enquiry, if referred to at all, required a very clear direction as to the limited purpose for which they could be used.That was not given. The final passage, marked [7], would have been of particular moment as the summary of the Judge's response to their question. Accompanied by a plain direction as to the legal test, and carefully explained as something the jury might take into account in approaching their factual task, it would have been unexceptionable.But because it was well open to being understood as a direction of law it was, in our opinion, potentially misleading.The same comment applies to the direction read as a whole. The direction went to the core issue of the case.It follows that there is such risk of miscarriage that the convictions cannot stand.

Decision

[31] The convictions are set aside.There will be an order for a new trial.

Solicitors

Heugh M Kelly, Wellsford for Appellant

Crown Law Office, Wellington for Crown