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Court of Appeal of New Zealand |
Last Updated: 16 December 2011
IN THE COURT OF APPEAL OF NEW ZEALAND
CA249/03BETWEEN SHIRLEY ANNE
SPELLACEY
Appellant
AND THE SOLICITOR-GENERAL OF
NEW ZEALAND
Respondent
Hearing: 26 November 2003
Coram: Glazebrook J William Young J Paterson J
Appearances: R M Lithgow
for Appellant
C L
Mander for Respondent
Judgment: 15 December 2003
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JUDGMENT OF THE COURT DELIVERED BY WILLIAM YOUNG J
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[1] This is an appeal against a judgment delivered in the District Court at Wellington on 19 June this year in which the Judge declined an application by the appellant for relief under s18, Proceeds Of Crimes Act 1991 (“the Act”).
Background to the appeal
[2] The case arises out of the criminal activities of Anthony Ronald Spellacey (“Mr Tony Spellacey”) which he carried out on a property at Kaitoke (“the Kaitoke property”).
[3] The Kaitoke property comprises some 4.822 hectares of land.
[4] On 1 December 1995, Mr Tony Spellacey entered into an agreement to buy the Kaitoke property. The purchase price was $165,000. The agreement was subject to Mr Tony Spellacey arranging $165,000 finance by 8 December 1995. The date of settlement was 15 December 1995 and the transaction was duly completed on that date.
[5] Mr Tony Spellacey obtained a loan of $175,000 from the Southland Building Society. He was able to provide as security the Kaitoke property and a property in Scarborough Terrace, Mt Victoria. The Scarborough Terrace property was owned by Mr Tony Spellacey and his mother, the appellant. It had been acquired by Mr Tony Spellacey and his father (“Tony senior”) as an investment property. Tony senior had died in July 1995 leaving his entire estate to the appellant (who was Tony senior’s widow). So she succeeded to Tony senior’s half interest in the Scarborough Terrace property.
[6] In order to facilitate the security arrangements, the appellant’s legal interest in the Scarborough Terrace property was transferred to Mr Tony Spellacey pursuant to a trust arrangement under which the appellant retained a 50% beneficial interest in the property.
[7] Mr Tony Spellacey also had an interest (along with his estranged wife) in a property at 126 Glenmore Street, Wellington.
[8] A Wellington solicitor, Mr Jonathan Crawford, acted for Mr Tony Spellacey and the appellant. He prepared the declaration of trust which recorded the arrangements between Mr Tony Spellacey and the appellant in relation to the Glenmore Street property. The declaration of trust was dated 14 December 1995 and executed by Mr Tony Spellacey. His signature has been witnessed by Mr Crawford. When the Kaitoke property transaction was settled on 15 December, Mr Crawford acted for Mr Tony Spellacey. His trust account statement which he rendered later shows that the purchase of the property and the repayment of an existing mortgage over the Scarborough Terrace property were funded, in a cash flow sense, from a payment of $6,500 made by Mr Tony Spellacey on 15 December and the $175,000 advanced by the Southland Building Society.
[9] The Scarborough Terrace and Glenmore Street properties were soon sold. Mr Tony Spellacey’s share of the proceeds enabled him to reduce the amount owing to the Southland Building Society to $3,865.45 as at 19 March 1996.
[10] In December 1997, Mr Tony Spellacey was arrested and charged with possession of cannabis oil and cannabis for supply, producing cannabis oil, cultivation of cannabis and other offences. These charges related to cannabis plants which Mr Tony Spellacey was then growing on the Kaitoke property and cannabis and cannabis oil which the police found on the property.
[11] We will set out later the relevant provisions of the Act. It is sufficient to note, however, at this point that the activities of Mr Tony Spellacey meant that the Kaitoke property was “tainted” and thus subject to forfeiture under that Act but that such forfeiture would not affect any third party who could establish a valid interest in the property.
[12] By this stage (ie December 1997) in excess of $30,000 was owed to the Southland Building Society and secured by way of mortgage against the property. So the Southland Building Society had an interest in the property which was required to be recognised under the Act. No valuation evidence as to the Kaitoke property was produced and it had not (at least at the time of the District Court hearing) been sold. Assuming that the acquisition of the Kaitoke property in 1995 was at market value and that the value of the property had not changed much between December 1995 and December 1997, the difference between the value of the property and the amount owed to the Southland Building Society was in the order of $130,000. These seem to be reasonable (if no doubt approximate) assumptions.
[13] On 23 January 1998, the appellant lodged a caveat against the Kaitoke property. She alleged an equitable interest in the property as mortgagee pursuant to an agreement to mortgage dated 10 December 1995. We note that although a copy of the caveat was not produced in the proceedings in the District Court, a copy was handed to us by Mr Lithgow without opposition. In February 1998 the appellant’s solicitor (Mr Crawford) drew up a memorandum of mortgage which reflected the appellant’s claim that on 10 December 1995 she had advanced to the appellant the sum of $100,000 at an interest rate of 8% per annum and that it had been agreed at the time that she should have security for this advance over the Kaitoke property. If this claim was correct, it was sufficient to swallow up all (or most) of the apparent equity in the Kaitoke property after allowing for the Southland Building Society mortgage. On this basis there would be nothing (or not much) in economic terms which could be subject to forfeiture.
[14] The fundamental issue in this case is whether the appellant’s claim to be entitled to a mortgage over the Kaitoke property based on a transaction entered into in December 1995 is true. But, before discussing the detail of the appellant’s claim, it is necessary to continue with the narrative.
[15] The Solicitor-General obtained a restraining order over the Kaitoke property under the Act and this was noted on the title on 24 March 1998.
[16] Mr Tony Spellacey pleaded guilty to the cultivation charge at the commencement of his trial in the Wellington District Court on 15 March 1999 and guilty to possession of cannabis oil for supply at the conclusion of the Crown case. The jury found him guilty of possessing cannabis plant for sale and of being a party to the production of cannabis oil. On 14 April 1999 he was sentenced to 13 months imprisonment.
[17] The Solicitor-General then applied for a forfeiture order in relation to the Kaitoke property and this application was opposed by Mr Tony Spellacey. As well, the appellant and Mr Tony Spellacey’s partner, Ms Kate Wagstaff, applied for orders under s18 of the Act. The appellant’s claim was based on the contention that she held an equitable mortgage over the Kaitoke property. Ms Wagstaff claimed an interest based on the principles stated in Lankow v Rose [1995] 1 NZLR 277. These proceedings came on for hearing in the District Court in February 2000. It will later be necessary to refer to evidence which was given at the February 2000 hearing.
[18] In a reserved judgment delivered on 10 April 2000, a District Court Judge granted the Crown's application under the Act to forfeit the Kaitoke property and disallowed the applications by the appellant and Ms Wagstaff for orders granting them relief as third parties. Without opposition, there was an order granting relief to the Southland Building Society, Mr Tony Spellacey's mortgagee.
[19] Mr Tony Spellacey, the appellant and Ms Wagstaff appealed to this Court. The upshot was that the appeals by Mr Tony Spellacey and Ms Wagstaff were dismissed but the appeal by the appellant was allowed and a rehearing of her application was directed, see R v Spellacey (CA133/00, 10 August 2000). Her appeal was allowed because her cross-examination in the District Court had been insufficiently particularised to give her an adequate opportunity to meet the case which counsel for the Solicitor-General was later to advance in submissions.
[20] The rehearing started on 9 September last year. On that day the Judge heard evidence from the appellant and Mr Richard Chan. The case, however was not able to be completed on that day. The hearing resumed on 26 March this year when the evidence of Ms Wagstaff and Mr Tony Spellacey was heard.
[21] The appellant sought a deferral of the hearing on 26 March. Given certain arguments advanced to us by Mr Lithgow, it is necessary to refer in a little detail to what happened.
[22] Mr Tony Spellacey had been involved in a car accident on 8 March in which he had run over and killed a pedestrian who was a patched member of the Mongrel Mob. As a result of the accident Mr Tony Spellacey suffered some injuries and he was, as well, emotionally traumatised. He had apparently received threats which seem to have originated with the Mongrel Mob.
[23] The hearing had been scheduled to resume on 17 March but was put off given Mr Tony Spellacey’s then mental and physical state.
[24] Prior to the hearing on 26 March the appellant sought a further deferral and medical reports as to Mr Tony Spellacey were provided in support of this application. The Judge, however, insisted on proceeding but her reasons for this were not recorded.
[25] When the time came for Mr Tony Spellacey to give evidence, he explained to the Judge that he had suffered injuries in the accident which were still causing him pain and that he had also suffered general mental trauma. He said that in the immediate aftermath of the accident he was attacked by “two or three people with bottles and all sorts of things”. He then went on:-
I’m having a great deal of difficulty now as we sit here, I just – my head is just a mess, I’ve got a headache and they seem to come on since we’ve been at the court and I’ve vomited just before I came into the court room, I thought – and my stomach is churning and I don’t feel I can do justice to this.
[26] There was then the following interchange between the Judge, counsel and Mr Tony Spellacey:-
THE COURT
MR LITHGOW: What Her Honour is asking you to do and we will try for a short time Mr Spellacey, we’ll take it step by step and if you cannot continue, we’ll have a break and if you cannot continue a few times, we’ll look at it again, is that what Your Honour will prefer?
THE COURT: I think so.
[27] Mr Tony Spellacey then gave his evidence. At times he made references to difficulties associated with the accident. For instance, on one occasion the Judge asked him if he would feel more comfortable standing and he responded by saying:-
I’m just getting a pain shoot down my leg Your Honour.
A little later he complained of nausea and asked if he could have a break saying that he wanted some fresh air. At that point the Judge adjourned for lunch. There are also some other references in the transcript to Mr Tony Spellacey saying that he did not feel particularly sharp. But, at least from the transcript, it would appear that he gave a reasonable account of himself when giving evidence.
[28] Written submissions were made to the District Court Judge which she received on 17 April, 30 April and 5 May this year. The result was a judgment delivered on 19 June in which the application was dismissed.
The relevant legislative provisions
[29] Section 15 of the Act provides:-
(1) On the hearing of an application for a forfeiture order in respect of a person's conviction of a serious offence, the Court may, if it is satisfied that property specified in the application is tainted property in respect of the offence, order that such of the property as is specified by the Court is forfeited to the Crown.
...
(3) A Court that makes a forfeiture order against property may, if it considers that it is appropriate to do so, by order,--
(a) Declare the nature, extent, and value of any person's interest in the property; and
(b) Declare that the forfeiture order may, to the extent to which it relates to the interest, be discharged pursuant to section 22 of this Act. ....
[30] It is common ground now that the Kaitoke property was “tainted property” for the purposes of s15 and thus properly subject to forfeiture. The appellant’s claim depends on ss17 and 18 of the Act.
[31] Section 17(1) provides:
Where an application is made for a forfeiture order, a person who claims an interest in any of the property specified in the application may apply, before the forfeiture order is made to the Court for an order under Section 18 of the Act.
[32] Section 18(1) of the Act provides:
Where--
(a) A person applies to the Court under subsection (1) or subsection (2) of section 17 of this Act in respect of an interest in property; and
(b) The Court is satisfied that the applicant's claim to that interest is valid,--
the Court shall, subject to subsection (2) of this section, make an order--
(c) Declaring the nature, extent, and value of the applicant's interest in the property; ...
[33] As to standard of proof, s85 provides:
...any question of fact to be determined by a Court of a Judge on an application under this Act is to be determined on the balance of probabilities.
Overview of the appellant’s claim
[34] The appellant’s claim in the District Court was along these lines:
Dear Tony,
As you know, I am not really in a position to help you without making for sure that other members are protected, of The Family. I have sought advice, and was told you will have to make an acknowledgement of the -debt, so that if anything happens to me, the money that I am going to lend you will be taken into account when settling my affairs, as that money will be left to the grandchildren.
I am prepared to lend you $100,000, at 8%, and understand if not paid back for any reason, I will put a caveat on the property on State Highway 2, Kaitoke.
“S A Spellacey”
Mum.
I, ANTHONY RONALD SPELLACEY, HEREBY ACKNOWLEDGE that I am indebted to SHIRLEY ANN ROSE SPELLACEY in the sum of $100,000 (one hundred thousand dollars) and agree to execute a registerable memorandum of mortgage in the said sum, together with interest thereon at the rate of 8% per annum if called upon to do so. over my property situate at State Highway 2, Kaitoke, pending subdivision.
Signed by the said A R Spellacey: “A R Spellacey”
10. No interest payments were made.
[35] Although evidence in support of this claim came not only from the appellant and Mr Tony Spellacey but also from Mr Chan and Ms Wagstaff, the nature of the case invited scepticism, at least from the point of view of the Solicitor-General.
[36] We will address later in this judgment the plausibility or implausibility of the claim as advanced by the appellant. But whether inherently plausible or implausible, the claim could not be lightly dismissed. Some people do deal in cash. It is not inconceivable that such a person might accumulate a float as large as $185,000 - $200,000. The appellant and Mr Tony Spellacey were able, in their evidence, to address the adverse contextual considerations which we have recorded. Most importantly, the case the appellant was advancing was either true or a barefaced scam involving organised perjury by not only the appellant and Mr Tony Spellacey but also Mr Chan and Ms Wagstaff.
[37] In the course of his arguments to us Mr Lithgow complained that the appellant’s claim had been dismissed by the Judge because of her perception (in his contention erroneous) of its inherent implausibility. We think that the Judge did regard the claim as inherently implausible and that this was a factor in her conclusion that it was not made out. But fairness to her requires us to record that there were some particular difficulties with the evidence in support of the claim as it unfolded; difficulties to which she referred in her judgment. Before we deal with the way in which the Judge determined the application it is right to refer to these problems.
[38] There were inconsistencies in the evidence as to the circumstances which surrounded the handing over of the money:-
[39] There were inconsistencies in the evidence as to how the acknowledgment came to be signed.
The loan was secured by an acknowledgment of debt which a friend prepared for me after I had spoken to the Citizens Advice Bureau and a local law firm in Palmerston North.
[40] There are also inconsistencies in the evidence as to the purpose of the loan.
On 6 December 1995 I advanced the respondent $100,000.00 by way of a loan for the purchase of the property at the corner of Marchant Road and State Highway 2, Kaitoke. The respondent had asked me to lend him the money to complete the purchase of the property and to mill some of the trees on the property which he and his defacto spouse, and KATHRYN MARGARET WAGSTAFF were going to use to build a new house on the property. ...
[41] Earlier opportunities to tell the loan story were not taken up.
[42] There was an absence of a conclusive and unimpeachable provenance for the two key documents (the letter of 6 December 1995 and the acknowledgment of debt).
The approach of the Judge
[43] In her judgment the District Court Judge referred to the standard of proof applicable. This is what she said:
[55] Mr Lithgow submitted that, by analogy with civil proceedings, where Mrs Spellacey relies on a document to prove her claim, and the Crown alleges it is a fraud, it is for the Crown to prove that. Mr Lithgow submitted that the appropriate standard of proof would be the preponderance of probability to the level appropriate to the seriousness of such an allegation.
[56] The Proceeds of Crime Act 1991 (“the Act”) contains a specific provision as to the standard of proof:
“... any question of fact to be determined by a Court or a Judge on an application under this Act is to be determined on the balance of probability”: section 85.
[57] Mr Mander noted that the legislature specifically directed the Court to apply this standard, in the knowledge that proceedings under the Act arise out of earlier criminal proceedings. Before granting relief, the Court must be satisfied that an applicant’s claim to an interest is valid. A Court can decline to order relief under s18(2) of the Act if satisfied that the Applicant was involved in the offending giving rise to the forfeiture application, or did not acquire the interest in the property in good faith and for value without knowledge at the time of the acquisition that it was tainted property.
[58] The approach taken in civil proceedings where there is an allegation of fraud and/or forgery is not applicable to an application under the Act. It is consistent with the text of the Act and its purpose that the burden of proof is on the applicant. The standard of proof is the balance of probabilities, as set out in s85.
[44] Having referred generally to the facts and the difficulties which the appellant’s claim faced (in terms broadly similar to those set out in paragraphs
[38]-[42] hereof) the Judge expressed her conclusions in this way:
[59] Whether the agreement to mortgage is valid depends largely on the credibility of Mrs Spellacey and Tony Spellacey. Mrs Spellacey was an unsatisfactory witness. When asked questions about matters which were central to her claim, she was unwilling or unable to answer them. The Court was left with the impression that she was neither a credible nor a reliable witness. That impression was confirmed by the evidence she gave. The evidence about the money in the motel safe, for example, was not plausible. Furthermore, there were demonstrated inconsistencies between the evidence she gave at this hearing, and what she said on earlier occasions. I was left with the clear view that Mrs Spellacey’s evidence could not be relied on and that she was not telling the truth.
[60] Tony Spellacey was unwell when he gave evidence at Court and that is something which I take into account in assessing his evidence. Again, there were clear discrepancies between his evidence at this hearing and at the earlier hearing, particularly in respect of how the key document, the agreement to mortgage, came into existence. There were also inconsistencies between his claim that there was a loan and his failure to mention it when he was asked by the police about encumbrances on the property at Kaitoke. Those marked inconsistencies on important aspects of the claim show his evidence is unreliable.
[61] There are also inconsistencies on critical issues between his evidence and his mother’s evidence and again between their evidence and that of their supporting witnesses, in particular Mr Chan.
[62] There is no support for the applicant’s claim from other evidence before the Court.
Conclusion
[63] The Court is aware of at least five different versions of how the key document, the agreement to mortgage, came into existence. On the state of the evidence called, the Court cannot be satisfied that the document was genuine. For similar reasons, I do not accept that the applicant gave her son a loan of $100,000 in cash in December 1995. The applicant has failed to discharge the onus on her to prove those matters on the balance of probabilities. Therefore, I find that her claim to an interest in the property at Kaitoke is not valid. She is not entitled to relief against forfeiture.
The appellant’s submissions
[45] For the appellant, Mr Lithgow advanced three general arguments:
[46] We will discuss the appeal by reference to these heads of argument.
The appellant’s first contention: The Judge’s approach to the onus and standard of proof was wrong
Argument for the appellant
[47] Mr Lithgow’s argument as to the onus and standard of proof was in these terms:
Where the applicant relies on a deed which, on its face, could discharge the legal burden upon it, and the respondent alleges fraud and/or forgery, as here, the burden of proof shifts to the respondent and the standard of proof is the preponderance of probability to the level appropriate to the seriousness of what are, in effect, allegations of serious criminal conduct.
We note that the acknowledgment of debt was not in fact in the form of a deed but this is of no particular moment in the context of the submission which was made.
[48] In support of this submission he relied on Doe d Devine v Wilson [1855] EngR 708; (1855)
10 Moo PCC 502; 14 ER 581 and Downes v Armitage (unreported A4/85, High Court, Dunedin, judgment of Tomkins J delivered 7 May 1987).
Argument for the respondent
[49] In his submissions Mr Mander maintained that the Judge adopted the right approach to the issues of onus and standard of proof. He says that s18(1)(b) of the Act means that the appellant could obtain relief only if the Court was “satisfied” that her claim was valid and that necessarily meant that the onus of proof was on her. Section 85 of the Act makes it clear that the standard of proof is the balance of probabilities. There is no need to go beyond the statute. He also contended that Mr Lithgow’s argument was contrary to the policy of the Act because it is hardly consistent with that policy for people facing forfeiture proceedings simply to put up pieces of paper of uncertain provenance and then claim that the Crown must disprove beyond reasonable doubt the bona fides of the transactions to which the pieces of paper purportedly relate.
Discussion
[50] The arguments advanced to us involve two very familiar problems:
[51] We think it perfectly clear that s18 of the Act meant that the appellant was required to satisfy the Court of the validity of her claimed interest if she was to obtain an order. So we see it as inescapable that the onus of proof in this case was on the appellant.
[52] Without expressing a view whether it is now helpful to talk of an evidential onus or a shifting onus (see for instance the discussion in Cross on Evidence, New Zealand Edition, Chapter 4) we are firmly of the opinion that this case fell to be decided by the Judge on the basis of her assessment of the probabilities. This conclusion is dictated by s85. But it may also be helpful to refer to one of the cases cited by Mr Lithgow and a more recent discussion on the same topic by Lord Nicholls in the House of Lords.
[53] In Doe d Devine v Wilson the defendants sought to resist the plaintiff’s claim by relying on a purported conveyance. The plaintiff’s response was that this had been forged by a man called Rochfort. So, at a very general level, the case was not entirely dissimilar to the present. The Privy Council dealt with the onus and standard of proof associated with the forgery issue in this way:
The second objection was, that the learned Judge in his charge to the jury told them, in substance, that they must try the question as to whether the alleged conveyance was forged in the same manner as if Rochfort was then on his trial for forgery. The learned Judge explains that this direction was accompanied with explanation and qualification; but their Lordships cannot but think that the jury understood the direction as above stated.
Now there is a great distinction between a civil and a criminal case, when a question of forgery arises. In a civil case the onus of proving the genuineness of a deed is cast upon the party who produces it, and asserts its validity. If there be conflicting evidence as to the genuineness, either by reason of alleged forgery, or otherwise, the party asserting the deed must satisfy the jury that it is genuine. The jury must weigh the conflicting evidence, consider all the probabilities of the case, not excluding the ordinary presumption of innocence, and must determine the question according to the balance of those probabilities. In a criminal case the onus of proving the forgery is cast on the prosecutor who asserts it, and unless he can satisfy the jury that the instrument is forged to the exclusion of reasonable doubt, the prisoner must be acquitted.
Now, the charge of the learned Judge appears to their Lordships to have in effect shifted the onus from the Defendants, who assert the deed, to the Plaintiff, who denies it, for in substance he tells the jury that whatever be the balance of probabilities, yet, if they have a reasonable doubt the Defendants are to have the benefit of that doubt. Certainly, it has been the practice so to direct the jury in a criminal case; whether on motives of public policy or from tenderness to life and liberty, or from any other reason, it may not be material to inquire, but none of those reasons apply to a civil case. If, indeed, by the pleadings in a civil case, a direct issue of forgery or not, be raised, the onus would lay on the party asserting the forgery, and this would be more like a criminal proceeding, but even then the reasons for suffering a doubt to prevail against the probabilities, would not, in their Lordships’ opinion apply.
(At 531-532; 592-593)
(Emphasis Added)
[54] Mr Lithgow sought to rely on the reference to the onus being on a party asserting a forgery where “by the pleadings in a civil case a direct issue of forgery or not [is] raised”. We are inclined to think that this is not the apposite part of the judgment in terms of the present case and that instead what are directly relevant to the present case are those parts of the judgment which we have underlined in the quotation. This, however, is of no particular moment in the present context where the onus of proof is dictated by the statute. What we see as most relevant and of most practical assistance is the reference to the requirement to decide such a case on the basis of “all the probabilities of the case, not excluding the ordinary presumption of innocence”.
[55] Very much the same approach is apparent in the speech of Lord Nicholls in Re H and Ors [1996] 1 All ER 1 at 16-17:
The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury. A stepfather is usually less likely to have repeatedly raped and had non-consensual oral sex with his under age stepdaughter than on some occasion to have lost his temper and slapped her. Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.
Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established. ...
[56] A Judge will think long and hard before finding that a claim is a barefaced scam and that four witnesses who have given evidence in support of it have committed perjury and on an organised basis. But, if that Judge is eventually satisfied that it is more likely than not that the claim is indeed a scam, then the Judge must find accordingly and not allow “a doubt to prevail against the probabilities”.
[57] Fairness to Mr Lithgow requires us to point out that there are authorities which support the broad tenor of his submissions, for instance People of the State of New York v Heirs of the late John Phillips [1939] 3 All ER 952; and the Armitage decision on which he relied (see para [48] above]. But we are satisfied that the predominant view is as stated in Doe d Devine v Wilson and Re H, see for instance Cross on Evidence, New Zealand Edition, para 5.9, and Phipson on Evidence, 15th Edition, at para 4.35.
[58] So we are of the view that the Judge was required to dismiss the claim advanced by the appellant unless she was satisfied that it was more likely than not that it was correct. In those circumstances, we see no error in her approach to the onus and standard of proof.
The appellant’s second contention: The Judge’s factual conclusions were reached unfairly because the key allegations were not put to Mr Chan and Ms Wagstaff and the Judge should have adjourned the hearing on 26 March to allow Mr Tony Spellacey more time after the 8 March accident
Appellant’s Argument
[59] Mr Lithgow contends that the case was conducted for the Solicitor-General in the District Court on a basis that may have been appropriate for defence counsel in a criminal case but was inappropriate in the circumstances of this case as involving “nibbling around” the evidence which Mr Chan and Ms Wagstaff had given. His primary complaint was that Mr Mander (who was acting for the Solicitor-General in the District Court as well as in this Court) did not squarely put to either Mr Chan or Ms Wagstaff that they were lying.
[60] Mr Lithgow was also very critical of the failure of the Judge to adjourn given the state of Mr Tony Spellacey following the 8 March accident. He said that it was unheard of for a Judge not to act on medical certificates of the sort which he proffered. He accepted that it would have been inconvenient to the Court to adjourn but claimed that fairness to the appellant required that adjournment. He said that Mr Tony Spellacey’s evidence covered the critical issues but only in a “raw sense”. As it turned out the evidence was not persuasive.
Argument for the respondent
[61] Mr Mander resisted the contention that he had not adequately challenged, by way of cross-examination, the evidence given by Mr Chan and Ms Wagstaff. He noted that Mr Chan had not provided an affidavit and that prior to the hearing on 9 September 2002 there had been no signal from the appellant of the claim that Mr Chan had drafted the acknowledgment of debt. He said likewise there was no advance notice of the evidence which Ms Wagstaff was going to give. So both Mr Chan and Ms Wagstaff had to be cross-examined “on the hoof”. He took us through the cross-examination and maintained that the effect of it was to make it perfectly clear that the evidence they were giving was not accepted by the Solicitor-General.
[62] Mr Mander challenged the contention that there had been any unfairness in the Judge requiring Mr Tony Spellacey to give evidence. He took us through the narrative of events. He noted in particular that the hearing scheduled for 17 March was deferred because of the accident. The practicalities of the case (requiring a credibility assessment from the Judge) required her to bring the hearing to a conclusion. Mr Tony Spellacey gave his evidence and a reasonable account of himself and the Judge took into account his condition when she gave her judgment.
Discussion
[63] There was a broad similarity between the alleged December 1995 transaction and another alleged cash loan or gift from the appellant to Mr Tony Spellacey said to have been made on 6 December 1997 which was referred to in evidence at Mr Tony Spellacey’s trial in March 1999 in an attempt to explain away cash that was found by the police on the Kaitoke property. That two broadly similar transactions were said to have occurred opened up the argument that Mr Chan and Ms Wagstaff had their dates confused and that their evidence at the rehearing which purported to relate to December 1995 was really a reference to something which happened in December 1997.
[64] Realistically, however, the latter of these propositions does not seem very likely (particularly in the case of Mr Chan who claimed to have prepared the 1995 acknowledgment of debt). So cross-examination addressed to this point did not really get to the heart of the case which the Solicitor-General was advancing. There was limited cross-examination of Mr Chan along these lines and more extensive and superficially more successful cross-examination of Ms Wagstaff on the same point.
[65] That said, the exigencies of the litigation process have to be recognised.
[66] The appellant did not make available to the Solicitor-General briefs of the evidence which was to be led orally at the rehearing. Mr Chan’s claim to authorship of the acknowledgment of debt was quite extraordinary given that he had given evidence in February 2000 in relation to the same transaction and not mentioned that claim. It is also a little odd given the evidence by the appellant and Mr Tony Spellacey at the February 2000 hearing. As well, Ms Wagstaff had produced an affidavit in support of her own claim which was dealt with at the February 2000 hearing. That affidavit did not address the alleged $100,000 loan.
[67] Given the way in which the evidence unfolded and at least in relation to the authorship of the acknowledgment of debt, and its surprising nature, Mr Mander had little practical choice but to cross-examine by reference to prior statements that each of the witnesses had made. As will already be apparent, we see little point in the suggestions which were made to these two witnesses that there may have been confusion. But the cross-examination of each witness as a whole, by reference to their prior evidence, did make it clear that their evidence was not accepted. In reality it would have added little or nothing to the case if Mr Mander had specifically put it to each of Mr Chan and Ms Wagstaff that they were lying.
[68] The issue whether the Judge ought to have proceeded with the case on
26 March given that Mr Tony Spellacey was still affected by what had happened was very much for the Judge to determine. An adjournment of the 17 March hearing had been granted. The Judge did have the opportunity to see Mr Spellacey giving evidence and was able to form an assessment as to whether he was able to do himself and the appellant justice. Although this exposure to Mr Tony Spellacey would appear to have come after her initial refusal to adjourn the proceedings, we have no doubt that she would have been prepared to revisit that issue had she seen it as being necessary. In the circumstances it would not be right for us to interfere with her implicit conclusion that it was appropriate to continue given that she was so much better placed than we are to form a judgment on this issue.
The appellant’s third contention: The Judge’s factual conclusions were wrong
Argument for the appellant
[69] Mr Lithgow’s general factual submissions were, in large measure, by way of reiteration of submissions advanced to the Judge. There are, however, three aspects of his submissions which we should note.
[70] Mr Lithgow said that the focus on what the appellant had claimed in her affidavit to be the purpose of the loan and the inconsistency with what actually happened was pedantic. It will be recalled that in her affidavit the appellant said that she had made the advance to enable Mr Tony Spellacey to complete the purchase of the property and to mill some of the trees on the property for use in a house. This evidence as a whole pointed to none of the cash alleged provided by the appellant being used to complete the purchase. Mr Lithgow’s argument was that if there were infelicities in the appellant’s affidavit they were of no particular moment given her age and background.
[71] In February 1998 the appellant and Mr Tony Spellacey went on record in the form of the unregistered mortgage which Mr Tony Spellacey signed, to the effect that there had been an advance of $100,000 made by the appellant to Mr Tony Spellacey in December 1995. In doing this the appellant and Mr Tony Spellacey had committed themselves to at least the broad outlines of the claim which was to be advanced in the District Court. Indeed, Mr Lithgow argued that the “‘stake’ was well and truly in the ground” on 23 January 1998 when a caveat referring to an agreement to mortgage of 10 December 1995 was lodged. This was before any proceedings under the Proceeds of Crimes Act had been taken. As well, all of this might fairly be thought to diminish the significance of any subsequent occasions (particularly in relation to the appellant’s police interview on 26 January 1998 and Mr Tony Spellacey’s trial on the criminal charges) on which the loan was not mentioned.
[72] Mr Lithgow also contended that anyone who had worked as a lawyer in a “knockabout practice” would have dealt with people who were suspicious of authority (and perhaps by implication tax averse), dealt in cash and accordingly maintained substantial floats of cash. So, he said there was nothing implausible at all in the claim that Tony senior had $185,000 to $200,000 in cash in his safe at the time of his death. Mr Tony Spellacey was his father’s son with some of his attitudes and a wheeler dealer. So he said again that there was likewise nothing implausible in Mr Tony Spellacey and his mother engaging in a comparatively large cash transaction recorded only in the form of the letter and an acknowledgment of debt.
Argument for the respondent
[73] Mr Mander did not respond in any detail to Mr Lithgow’s criticism of the factual findings being content to rely on the Judge’s decision.
Discussion
[74] A notable feature of the case is that Mr Lithgow was not able to point to any tangible and specific errors in the Judge’s factual analysis of the case. His broad position was that she reached the wrong result. Where an appellant can point to no obvious error on the part of a Judge, a challenge to a factual conclusion is unlikely to succeed.
[75] We accept that Judges should always be alive to the possibility that their own personal experiences may not be a sure guide to the way in which other people behave. On the other hand it is simply not possible to ignore personal experience when assessing the probabilities in a factual controversy. Few, if any, Judges (including those with “knockabout” professional experience) would regard the account of events advanced by the appellant as particularly plausible. More than that, there were particular problems with the narrative which necessarily cast a shadow over the credibility of the claim.
[76] There is scope for differing views as to the weight to be placed on some of the factors which the Judge relied on. There was merit in at least the first two of the arguments advanced by Mr Lithgow to which we have referred earlier (see paras [70] and [71] above). But all the considerations mentioned by the Judge were, nonetheless, relevant. For instance, although the caveat which referred to an agreement to mortgage of 10 December 1995 had been lodged on 23 January 1998, it is nonetheless odd that the appellant did not mention the alleged loan when she was interviewed by the police on 26 January 1998.
[77] It is not for this Court to retry the case as Mr Lithgow, in effect, invited us to do. Given that there were no tangible errors made by the Judge and allowing as well for the unsurprising nature of her eventual conclusion, we would be stepping well outside the appropriate role of an appellate Court if we were to interfere with her judgment.
Disposition
[78] The appeal is dismissed.
Solicitors:
R M Lithgow, Wellington for Appellant
Crown
Solicitor, Wellington, for Respondent
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URL: http://www.nzlii.org/nz/cases/NZCA/2003/293.html