The Queen v Porter [2006] NZCA 110 (1 June 2006)

Last Updated: 22 June 2006

IN THE COURT OF APPEAL OF NEW ZEALAND

CA51/06

THE QUEEN



v



ALISTER JOHN CHARLES PORTER

Hearing: 1 June 2006

Court: William Young P, Chambers and Arnold JJ

Counsel: S D Cassidy for Appellant
D H Jones QC and A M Killeen for the Crown

Judgment: 1 June 2006

JUDGMENT OF THE COURT

The appeal against conviction and sentence is dismissed.

REASONS

(Given by William Young P)

Introduction

[1]

The appellant was tried before Judge Hubble and a jury in the District Court at Auckland on three fraud charges and two charges laid under s 45 of the Serious Fraud Office Act 1990 of failing to comply with a notice given under s 9 of that Act. He was found guilty on all charges he faced and was later sentenced to a total of four years imprisonment. On trial with him was Murray Hewitt who faced two fraud charges (one jointly with the appellant). Hewitt was found guilty on both charges and was later sentenced to three years imprisonment.

[2]

The appellant now appeals against conviction and sentence.

The factual background

[3]	The appellant incorporated a company, AJ Property Investments Ltd. He was the sole director and shareholder. In November 2000, the company entered into an agreement to purchase a substantial rural property for $3.5m inclusive of GST. The deposit was 10% of which $1,000 was payable immediately and the balance on or before 31 January 2001. A vendor-generated tax invoice was forwarded to the company and utilised by it to obtain from the Inland Revenue Department $422,500 (as a GST input tax credit). This money was paid to the company on 13 December 2000. The bulk of this money was sent overseas. Of what was left, some was spent on travel expenses for the appellant and his family and most of the balance was dissipated by cash withdrawals made via the use of a cash card overseas. All that that remained in the company’s bank account was approximately $8,600. Unsurprisingly, the company did not pay the balance of the deposit and the agreement was eventually cancelled. Nor was there ever an accounting with the Inland Revenue Department. So the Inland Revenue Department was out of pocket by $422,500, less the $8,600 which was left in the company’s bank account and which the Department was able to seize.
[4]	In late 2001 a virtually identical scheme was perpetrated by Hewitt. The jury’s verdicts show that the transactions involving AJ Property Investments which we have just discussed provided the template for the Hewitt scheme and that the appellant was a party to the second scheme.
[5]	The charges against the appellant alleged:

a) Breach of s 229A of the Crimes Act 1961, associated with the use of the GST return involved in the AJ Investments scheme(count one);
b) Misappropriation of the funds of AJ Investments (count two);
c) Non-compliance with notices given under s 9 of the Serious Fraud Office Act (counts three and four); and
d) Party liability in relation to Hewitt’s s 229A offence associated with the use of the GST return in connection with the second scheme, a joint count which Hewitt also faced (count five).

A sixth charge which Hewitt faced corresponded to the second of the charges against the appellant. As indicated both men were found guilty on all counts they faced.

The conviction appeal

Overview

[6]	The appeal against conviction was advanced on the following grounds:

a) Complaint that the judge inappropriately allowed further Crown evidence after the close of the Crown case.
b) Alleged misdirection as to the standard of proof.
c) Complaints as to the direction given by the Judge when the jury indicated difficulty reaching verdicts on all charges and the length of the jury’s deliberations.
d) The contention that count two above was not sustainable.

Complaint that the judge inappropriately allowed further Crown evidence after the close of the Crown case.

[7]	This issue relates to the charges laid under the Serious Fraud Office Act.
[8]	The s 9 notice relied on was signed by Mr Gilbert Beattie of the Serious Fraud Office. The notice in question had to be given by either the Director or his delegate. When he signed the notice, Mr Beattie purported to be acting as the Director’s delegate. In his initial evidence Mr Beattie did not give explicit evidence that he was acting under delegated authority when he executed the notice.
[9]	At the conclusion of the Crown case, the appellant sought a discharge under s 347 of the Crimes Act on the ground that there was no proof that Mr Beattie was acting with delegated authority from the Director. The Judge dismissed this application. He was of the view that the presumption under s 41 of the State Sector Act 1988 applied but, on a belt and braces basis, permitted Mr Beattie to be recalled to give evidence that he was exercising delegated authority.
[10]	This ground of appeal fell away in the course of argument before us, as Mr Cassidy accepted that the presumption under s 41 of the State Sector Act applied and that, accordingly, there had been no need for the additional evidence to be called. As to this, we note that Mr Cassidy accepted that there had been no challenge, in the course of the Crown case, to Mr Beattie’s authorisation.

An alleged misdirection as to the standard of proof

[11]	In his summing up the Judge dealt with the standard and burden of proof in this way:

Most important of course is that the burden of proving the case is on the prosecution. Every accused New Zealander is entitled to sit and say, you prove it. And so there is no obligation on an accused person to give evidence and you have seen that in this case both accused have called some evidence or Mr Porter did, but have not given evidence themselves. Now you cannot draw any adverse inferences from that. I will deal with that in more detail in a moment, but the burden of proving a case is on the prosecution. The defence does not have to prove their innocence so you must be careful to bear that in mind.
The standard of proof is a high one. It is beyond reasonable doubt. So all of the ingredients of each of these charges has got to be proved beyond a reasonable doubt and all that means is that you have got to be sure. If you are sure then it is your duty to convict, and if you are sure of innocence it is your equal duty to find the accused not guilty, and if you are left in a middle situation where you are not completely sure, you are left in a guessing situation, then again of course you have got to acquit. So the reason, or definition that I must give you of beyond reasonable doubt is simply that you must be sure.

[12]	A little later when discussing the exculpatory explanation advanced by the appellant and his co-accused, the Judge said

And if you think this is a reasonable possibility, that there was this genuine belief by these men, you must acquit them.

[13]	After the jury retired a number of issues were raised with the Judge by counsel, including a complaint by Mr Cassidy as to the standard of proof directions. The Judge then redirected the jury in these terms:

Alright, and Mr Cassidy has raised a number of matters, in the fundamental area of the standard of proof, I got it wrong. The standard of proof is beyond reasonable doubt and that simply means that you must be sure. I then went on to say that if you are sure that he is guilty then it is your duty to acquit but I wrongly said that you need to be sure of his innocence before you need to acquit. You do not, of course, what you need to have is a reasonable doubt so I ought not to have said that to you and I ought not to have mentioned an interim phase where you may be half way between. The simple situation is you must be sure, beyond reasonable doubt of guilt before you can convict and if you are not at the point of being sure, then you must acquit. In effect, there should be no reasonable risk of guilt. That is what it amounts to.

In the case on appeal the word "guilt" which we have emphasised is crossed out and the word "innocence" but with a question mark has been handwritten over it. We imagine that what the Judge said is recorded in the typescript.

[14]	After the jury retired a second time there was the following interchange with counsel:

MR JONES: Sir, sorry, when Your Honour was giving the direction on the standard of proof, Your Honour said, as I have noted, if you are sure of guilt you should acquit and if there is a reasonable possibility of guilt you should acquit just seemed to be a little –
THE COURT: Did I say that?
MR JONES: That is what I noted.
MR CASSIDY: I think the jury might have a handle on reasonable doubt by now.
MR JONES: I’m happy to leave it , Sir, if you are.
THE COURT: Let us leave it, if anything it is in favour of the accused, so we will leave it that way.

[15]	Some time later when the Judge was responding to a question from the jury, he reverted to the standard of proof directions he had earlier given:

Whilst we are here, members of the jury, counsel pointed out to me, most amusingly in my direction to you on the burden of proof, I apparently said that there is an obligation on you to be sure and that if you are sure of guilt, you must acquit. Well, that is not the case, you probably picked up on that. Certainly counsel did and at my expense, so that obviously is not the case.

[16]	Mr Cassidy stressed the infelicities in all of this. In his submissions to us, Mr Jones QC, for the Crown, invited us to look at what was said in a somewhat broader context:

It must also be noted that the issue of standard of proof had been covered by the court in its opening remarks at the beginning of the trial, in the Crown opening, the defence opening (for the appellant Porter), the Crown closing and both defence closings.

[17]

The Judge’s summing up on this point was not deft and the mis-statements made were unfortunate. Further, the "reasonable risk of innocence" test which the Judge either gave (or meant to give) was unorthodox albeit that it is at least broadly comparable to the more orthodox equating of a reasonable possibility of a defence being true with a reasonable doubt. Importantly, however, the Judge did make it clear that the jury should return verdicts of guilty only if sure of guilt. This is the primary requirement of Judges summing up on the standard of proof. Further, he initially did so in the context of an appropriate directions as to the presumption of innocence and the absence of any burden on the accused to prove innocence.

[18]

Although the directions were messy, we are satisfied that there was no material misdirection.

Direction given by the Judge when the jury indicated difficulty reaching verdicts on all charges and the length of the jury’s deliberations.

[19]	The jury’s retirement was lengthy. After deliberating for a day and a half, the jury indicated that it had verdicts on two counts but were having difficulty with the other counts. The Judge gave a Papadopoulos direction at about 4.00pm that day which concluded in this way:

So I am going to ask you, as is usual in these cases, to be good enough to retire again to see whether, my having given you this direction, you are able to reach verdicts. I do not intend to hold you here for another night in the hotel but I am going to give you some more time to consider the matter in the hope that we can get that result. So I will ask you to retire again now and see if you can make that progress.
I will check shortly, Mr Foreman, to see if the position has changed. If not we may just take the verdicts on what you have been able to agree on so far unanimously.

[20]	Just before 6.00pm Mr Cassidy invited the Judge to take whatever verdicts had been reached and discharge the jury. This resulted in a minute in these terms:

Yes, I think that is reasonable and so Mr Cassidy has recorded that, in his view, it being 6 o’clock and the jury having received Papadopoulos almost an hour and a half, nearly two hours ago, that we should say to them now that we should take verdicts on whatever charges they have managed to resolve.
Mr Jones considers that another quarter of an hour ought to be granted. I am also of that view because of that last enquiry at 20 past 5, they said that they were making progress and did not require dinner which they would usually take at 6 o’clock, so we will give them another quarter of an hour.
At that stage, we would enquire as to where they were at. I might seek some more details of exactly where they are at, at that stage and we will make a decision at that point what we are going to do. But yes, Mr Cassidy’s demur at that has been recorded.

The jury returned verdicts within the 15 minutes sought by Mr Jones.

[21]	Mr Cassidy’s complaint on this aspect of the case was a little elusive.
[22]	It is was well open to the Judge to give a Papadopoulos direction after such a lengthy retirement and what he said did not differ (at least materially) from the direction approved in R v Accused (CA87/88) [1988] 2 NZLR 46. Mr Cassidy eventually conceded both propositions.
[23]	Accordingly there is nothing in this ground of appeal. Nor was there anything untoward in the way the Judge dealt with the suggestion that he should discharge the jury.

The contention that count two was not sustainable

[24]	Mr Cassidy’s submissions on this aspect of the case were also elusive.
[25]	One element of the argument was that count two was simply the other side of the coin to count one and thus duplicated it. Mr Cassidy said that on the basis of the jury’s verdict on count one, any dealing by the appellant with the funds would be a crime.
[26]	Although there was in essence a single stream of fraudulent activity, count one and count two were directed at different aspects of what happened. Count one related to the use of the GST return to obtain the money from the Inland Revenue Department and count two focused on the moving of the funds out of the company (and thus out of the reach of the Department). If the money had not been moved out of the company, the position of the Inland Revenue Department would have been stronger. So count two did not, in substance, duplicate what was the alleged count one.
[27]	The other primary element of the argument was that there was no proof that the funds which were withdrawn from the company were not applied for another legitimate purpose of the company. We are satisfied that it was well open to the jury to infer that these funds were not applied for the company’s legitimate purposes. Facts which support that inference are:

a) The fraudulent nature of the GST return which generated the funds;
b) The transfer of the funds into the appellant’s personal name in an overseas bank account;
c) Despite investigation, nothing tangible ever came to light to suggest that the company had any legitimate business purpose; and
d) The similar fact evidence associated with the effectively identical fraud committed by Hewitt to which the appellant was a party.

Broadly similar considerations apply to the balance of the money (leaving aside the $8,600 which was not spent).

[28]

Associated with the arguments under this head of the appeal was a suggestion (in the end not pursued) that as the appellant was the only director and shareholder of the company he could do what he liked with its assets. Mr Cassidy was right not to pursue this argument as it would not be credible to suggest that the appellant’s status in relation to the company permitted him to strip the assets out of the company in a way which necessarily had the consequence (and by inference the intention) of defeating any later claim by the Inland Revenue Department.

The sentence appeal

[29]	This in the end came down to a disparity argument.
[30]	The Judge’s starting point for the appellant on the fraud charges was three and half years whereas he started at three years for Hewitt. There being no mitigating factors, those were the sentences imposed on the fraud charges. He also sentenced the appellant to an additional six months imprisonment (to be served cumulatively) on the charges laid under the Serious Fraud Office Act.
[31]	Given that the appellant was found guilty of the fraud in respect of which he was the principal offender and as a party to the fraud committed by Hewitt, the difference in starting points was hardly unfair to the appellant. This is particularly so as the Judge concluded that the appellant was the architect of Hewitt’s fraud (and in this sense directly responsible for the losses associated with it) and the appellant had previous convictions for fraud. Likewise the cumulative sentence of imprisonment on the s 45 charges was appropriate.
[32]	The case comes nowhere near meeting the test which applies in determining whether disparity of sentence warrants appellate intervention, see R v Rameka [1973] 2 NZLR 592 and R v Lawson [1982] 2 NZLR 219. In the latter case, McMullin J, at 223, observed:

But the test is objective; not subjective. It is not merely whether the offender thinks that he has been unfairly treated but whether there is a real justification for that grievance; whether a reasonably minded independent observer aware of all the circumstances of the offence and of the offenders would think that something had gone wrong with the administration of justice.

Result

[33]	The appeal against conviction and sentence is dismissed.

Solicitors:
Crown Law Office, Wellington