	Home \| Databases \| WorldLII \| Search \| Feedback Court of Appeal of New Zealand

Home | Databases | WorldLII | Search | Feedback

Court of Appeal of New Zealand

You are here: NZLII >> Databases >> Court of Appeal of New Zealand >> 2006 >> [2006] NZCA 276

The Queen v Papple and anor [2006] NZCA 276 (28 September 2006)

Court of Appeal of New Zealand

[Index] [Search] [Download] [Help]

The Queen v Papple and anor [2006] NZCA 276 (28 September 2006)

Last Updated: 4 October 2006

IN THE COURT OF APPEAL OF NEW ZEALAND

CA207/05
CA215/05

THE QUEEN

v

MARGARITE HUIA PAPPLE
TINA MARIE WEST

Hearing: 28 August 2006

Court: O'Regan, Williams and Heath JJ

Counsel: W C Pyke for appellant Papple
J N Bioletti for appellant West
P J Morgan QC and M A Treleaven for Crown

Judgment: 28 September 2006 at 11 am

JUDGMENT OF THE COURT

Both appellants’ appeals against conviction and sentence are dismissed.

REASONS OF THE COURT

(Given by O’Regan J)

Introduction

[1] Mrs Papple and Ms West were convicted of a number of fraud charges after a jury trial in the District Court. The trial Judge, Judge Weir, sentenced them both to imprisonment for five years. They appeal to this Court against both conviction and sentence.
[2] Ms West’s conviction appeal is based on an allegation that there was a misdirection in the Judge’s summing up on the position of co-conspirators. Mrs Papple’s appeal is based on a number of criticisms of the Judge’s summing up, particularly the direction on inferences. There is also a general allegation that the summing up was unfair to the defence.
[3] The sentence appeals are pursued on the basis that the sentences imposed on the conspiracy charge (five years imprisonment), being the maximum for that offence, were manifestly excessive.
[4] In order to provide some background to the matters raised in relation to the summing up, it is necessary to set out some of the background to the offending and to the outcome of the trial.

Background

[5] The key charge was count 1, which alleged a conspiracy to defraud the public. Mrs Papple and Ms West were charged along with Mrs Papple’s husband. The jury convicted both Mrs Papple and Ms West, but were unable to reach a verdict in relation to Mr Papple. Other counts in the indictment were essentially subsidiary to the conspiracy charge. The charges against each of the accused at the trial, and the jury’s verdict in respect of them were:

Count	M Papple	W Papple	West
(1) Conspiracy to defraud (s 257)	Guilty	Disagree	Guilty
(2) Obtaining by false pretences (s 246(1))	Guilty	Not guilty	N/A
(3) Theft by failing to account (s 222)	Guilty	Not guilty	Not guilty
(4) Theft by failing to account (s 222)	Not guilty	Not guilty	Guilty
(5) Failure to supply information (s 45 SFO Act)	Disagree	N/A	N/A
(6) Failure to supply information (s 45 SFO Act)	N/A	Disagree	N/A

[6] Mr Papple was subsequently convicted after a retrial of conspiracy to defraud, sentenced to imprisonment for two years and granted leave to apply for home detention. There was no retrial on counts 5 and 6 because a stay was issued by the Solicitor-General.
[7] The following description of the Crown case against the appellant is based on the summary of the case set out in the Judge’s sentencing notes.
[8] The convictions arose out of the appellants’ involvement in the operation and control of two companies, Lakeland Wealth Creators Limited (Lakeland) of which Mrs Papple was the sole director and shareholder, and Wespap Limited of which Ms West was initially a director and shareholder. She later resigned as a director, but retained her shareholding and effective control of the company. The Crown case was that, over a period of two years, from September 2000 to September 2002, during their operation of these companies, the appellants had defrauded the public of a minimum of $8.3 million of the $14.6 million in investments received.
[9] The activities which led to the convictions commenced when Mrs Papple was introduced to Ms West, a director and shareholder of FF Traders Limited, which was in the business of procuring people to invest money on the basis that spectacular returns would be guaranteed. Mrs Papple personally invested in FF Traders and did receive the very good returns initially. Apparently encouraged by this, she set up Lakeland in September 2000 and then Wespap in May 2001 for the purpose of carrying on a similar business. These investments were generally referred to as off-shore investment opportunities or trades. In fact, FF Traders was unsuccessful in itself. By way of example, Lakeland invested $1.5 million in FF Traders and got back only approximately $850,000. There were no returns after April 2001 to Lakeland from FF Traders.
[10] Apart from FF Traders, Lakeland and Wespap invested in highly speculative schemes which, in truth, were just frauds themselves. The Judge was prepared to accept that initially Mrs Papple was naïve. Her naivety was induced because of the returns she had received on her own investment through FF Traders. The Judge said this was evidenced also to some degree by the fact that some of the initial investments of Lakeland were on behalf of friends or whanau of Mrs Papple. But the activities of that company and later Wespap extended beyond that to members of the public.
[11] The appellants’ method of soliciting funds from investors was to offer high returns, ranging from an effective interest rate of 3% per month up to 10% per month and sometimes even higher. Both appellants held themselves out as having been very successful with earlier investments and therefore guaranteed the principal of the investors. They would then use the fresh investment money to pay the very high returns guaranteed to early investors. As the net widened and as the appellants’ need for money increased, these guarantees became more and more extravagant, so that in some cases they guaranteed not only the principal but also the interest. Towards the end there were guarantees that the investment funds themselves would be held frozen in a New Zealand account and would never leave the country. None of those representations were true.
[12] What actually happened was that the investments which the appellants made through Lakeland and Wespap were unsuccessful and they used the fresh funds coming in from the new investors to initially pay the promised returns to the earlier investors. The Judge found the fact that these investments were unsuccessful had to be known to the appellants. He said this was evidenced by the fact that in respect of Lakeland the last investment of $300,000 was made in September 2001. Yet between September 2001 and September 2002 Lakeland received over $6.5 million from investors which was not invested. The scheme had many of the features of a classic "Ponzi" scheme.
[13] The Judge said much of the money received from investors had gone to the appellants. Over the period of time between September 2001 and September 2002, over $4.5 million was paid out to earlier investors as so called profit returns. Over $1.6 million was paid to personal accounts operated by Mrs Papple or other parties on her behalf.
[14] The evidence presented by the Serious Fraud Office accountant, Ms Peden, was that from approximately September 2000 to September 2002 funds were invested as follows (we have rounded the figures to simplify the analysis):

(a) Lakeland received $11.5m from investors;

(b) Lakeland made investments (largely off-shore) of $3.1m being 27% of the total amount received by it;
(c) Lakeland received a total return of $1m on all of the investments made;
(d) Lakeland made payments of $6.3m to investors (being investors both in Lakeland and Wespap), of which $5.1m were on account of "profit returns" (although much of this money was in fact further investment funds);
(e) Lakeland made payments of $2.4m to Mr and Mrs Papple, receiving $94,000 from them.
(f) Wespap received $3.1m from investors;
(g) Wespap made investments of $1.7m (largely off-shore) being 54% of the total amount invested;
(h) Wespap received returns of $46,000 on investments;
(i) Wespap made payments totalling $683,000 to investors in Lakeland and Wespap, of which $551,000 was "profit returns" paid to investors;
(j) Wespap paid $497,000 to Lakeland, and received $351,000 from Lakeland. Wespap paid $200,000.00 to Mr and Mrs Papple.

[15] The Judge referred to the evidence of Ms Peden as to where some of that money went. Approximately $280,000 was used to purchase a property occupied by one of Mrs Papple’s sons. Other major categories of Mrs Papple’s spending were: house construction and furnishings ($1.4 million); general living expenses ($260,000); travel and accommodation ($186,000); jewellery and art work ($102,000); payments to family members ($13,500); cash withdrawals ($76,000); and payments to Ms West ($25,000). Over the same period of time, Lakeland made nett payments to Ms West of over $128,000.

Ms West’s conviction appeal

[16] In his written submissions, counsel for Ms West, Mr Bioletti, advanced the conviction appeal on the basis that the Judge had not adequately directed the jury on how to approach the evidence in relation to the conspiracy charge (count 1). The Judge had directed the jury in the following terms:

You must consider each case against each accused individually. That means that you must look at the evidence as it relates to each separately. You must be careful when you do that to exclude any evidence that relates only to another accused. It would be wrong to bolster up the case against one accused by relying on evidence which relates to the other or to reason that if one person is guilty of that offence, he must be also guilty of the other.

[17] Mr Bioletti argued that this direction was insufficient and that there was need for a direction in the use to which evidence can be put under the co-conspirators rule.
[18] After the written submissions of Crown counsel were received, Mr Bioletti moved away from this argument in oral submissions. He accepted that this was not a case in which the co-conspirators rule was in issue because the Crown had not relied on the acts and statements of one conspirator which had been carried out or said in the absence of another conspirator to prove participation of the absent conspirator in the conspiracy.
[19] However, he then pursued another angle in his oral submissions. He said there was still a lack of direction to the jury on what types of evidence could be used to establish the existence of a conspiracy, and that this had led to a miscarriage of justice.
[20] We do not think there is anything in this point. The Crown case was essentially that the accused had participated in a combined effort in which all had active roles involving joint actions (that is, actions by one which actively involved the others or were undertaken in the presence of the others). There is no basis for suggesting that the Judge’s direction led to a miscarriage in relation to Ms West.
[21] The direction which the Judge gave was in conventional terms and was, if anything, favourable to the defence in relation to the conspiracy charge. Mr Bioletti acknowledged this in argument. We are satisfied that the directions given by the Judge on the need for the jury to satisfy itself from the evidence presented in relation to each accused that the particular accused was a participant in the conspiracy was sufficient in the circumstances of this case. Accordingly, Ms West’s appeal against conviction fails and is dismissed.

Mrs Papple’s conviction appeal

[22] There are two elements to Mrs Papple’s conviction appeal. The first is a general complaint about lack of balance in the Judge’s summing up. It involves a challenge to the convictions on all of the three charges on which Mrs Papple was found guilty. The second element is raised only if the first fails, and refers only to the conviction on count 3. The argument in relation to that count is that the verdict cannot be supported having regard to the evidence. We will deal with the complaint about lack of balance first.

Lack of balance in summing up

[23] There were a number of aspects to the complaints about the summing up, but the overall allegation is that the summing up was too favourable to the Crown, and as a result the defence case was not fairly represented to the jury.
[24] The starting point is the defence case. Mr Pyke put it in these terms:

The case for [Mrs Papple] at trial was that she was encouraged by the initial apparent success of her investments through F F Traders Ltd; that she believed the representations as to security and returns made to her by various off-shore persons and considered, based on her belief that promised returns would materialise, that the expected returns from further investments would allow Lakeland and Wespap to make good on their investment contracts. She considered that she was entitled to pay returns to investors using other investors’ funds, owing to her belief that the schemes would prove successful and enjoy handsome returns. This belief was also the basis for her considering that she was entitled to draw on investment funds for personal purposes (namely, that expected profits would deliver sufficient income to cover the drawings).

[25] Mr Pyke said that the evidence from Mr Papple corroborated this defence, though his evidence was less detailed, reflecting his lesser involvement. It also relied on the evidence of a defence expert, Mr Fleming, who gave evidence that the returns expected by the appellants could have been realised, had the contracts been honoured. That was subject to the important qualification that he made no judgment as to the likelihood of the promised returns coming to fruition.
[26] The Crown case was summarised by counsel for the Crown, Mr Morgan QC, as follows:

18 There was an agreement between the three accused, unwritten and unspoken that they would embark on a particular course of conduct together. That agreement was evidenced by the proven course of conduct that they did embark upon.
19 That course of conduct was the use of deceit, falsehoods and other fraudulent means. The means were many and varied but the most significant was telling everybody that they were a successful business and that the people should invest their money with them, which they in turn would invest in a "trade" with the investors capital guaranteed. In fact none of that was true. It was not a successful business, most of the money they were not investing at all. What they were investing was on ridiculously high risk schemes and there was no guarantee whatsoever.
20 The accused’s purpose was a fraud on the public. Not a fraud in the sense that they deliberately set out to make everybody lose their money, but a fraud in the sense that the accused were using the deceit to their own economic benefit to the peril of the people from whom they were attracting the money.
21 They were persuading people to invest money in them knowing full well that what they were going to use it for was to meet capital repayments and profit returns they were paying out to other investors which in turn maintained the pretence of a successful business and they were using a good portion of the money for their own purposes, in the Papples’ case the building of a house and in West’s case paying off her obligations to investors in F F Traders.

[27] Mr Pyke said that the lack of balance in the summing up arose because of the extensive examples the Judge gave after his general (and uncontroversial) direction about the inferences, and in the way the Judge summarised the defence case.

(i) Inferences direction

[28] The Judge gave the customary direction about the entitlement to draw inferences early on in his summing up (at [12]). At the beginning of the summing up, the Judge had said that he would explain matters of general importance that apply to all criminal trials, before commenting on the case itself. The inferences direction was one of these matters of general importance. But in order to illustrate the inferences direction, the Judge then gave a number of examples which were introduced as follows:

The Crown points you to a number of facts that it suggests lead to the inference that there is guilt. I want to outline briefly to you now the skeleton of those points. I will address them in greater detail at a later stage of this summing up.

[29] There then followed three paragraphs, each containing a discussion of an aspect of the evidence which the Crown relied on in support of its contention that Mrs Papple had acted dishonestly rather than, as the defence contended, incompetently and naively. The Judge did not specifically detail what inference should be drawn from each of these elements of the evidence, but it could be taken from the introductory wording referred to above that the Crown relied on each element as supporting an inference of dishonesty and therefore guilt on the part of Mrs Papple.
[30] Mr Pyke criticised this aspect of the summing up on two bases. The first was that the "examples" were not really examples or, if they were, they were inappropriate examples of the jury’s entitlement to draw inferences from proven facts. In effect, they were summaries of elements of the Crown case taken in isolation from the rest of the Crown case, and separated from the later discussion of the defence case.
[31] We agree that, taken in isolation, this was an unsatisfactory aspect of the summing up. In effect it isolated three elements of the Crown case from the overall discussion of the Crown and defence cases, and placed them before the jury in the context of the introductory and generic directions to the jury which the Judge said he would give before turning to the features of the particular case. We do not think this is best practice, though we accept, of course, that an inferences direction can be and often is helpfully supported by an example of the drawing of an inference and that it can be helpful to use an example from the case at hand. But the examples in this case were not examples of the jury inferring a particular point from proven evidence, but rather aspects of the Crown case aimed at establishing the ultimate issue of guilt or innocence. They were dealt with at some length.
[32] That said, however, the issue of balance in a summing up can be evaluated only by considering the summing up as a whole. Before doing that, we turn to the second aspect of the criticism made by Mr Pyke.

(ii) Unfair summary of the defence case

[33] The criticism of the way the Judge summarised the defence case for Mrs Papple is not a criticism of the adequacy or comprehensiveness of the summary. Rather, the criticism focuses on a number of comments which the Judge interpolated in his summary of the closing submissions made by Mrs Papple’s trial counsel. It was argued that these undermined the defence case and were unfair.
[34] The comments which were the subject of this criticism follow.
[35] The Judge referred to the criticism made by Mrs Papple’s trial counsel of the Crown’s position that the investments made by Lakeland were "ridiculous". The defence position was that there had been some success at the outset, and that other people had been "taken in" as well as Mrs Papple. Defence counsel made particular reference to one very experienced investor who had invested with Mrs Papple, Mr H, as an example of another person who had been "taken in".
[36] The Judge noted that the defence counsel’s submission that Mr H been taken in was correct, but then added a qualification to the effect that Mr H had given evidence that he had invested for three reasons: (1) the successful investment made by another experienced investor, which the Judge noted had resulted from a payment being made to that investor by Ms West personally; (2) the written and verbal confirmation that Mr H’s principal would not be at risk and; (3) the assurances he received from Mrs Papple about the success of previous trades.
[37] Mr Pyke said this comment was unnecessary because it did not meet defence counsel’s point that the fact that Mr H was taken in supported the defence case that Mrs Papple was too. We disagree. In our view the qualification was directed to the point made by defence counsel and was not, in itself, unfair. The Judge’s summary of what Mr H had said were his reasons for investing was accurate.
[38] The second comment came in the context of the Judge’s summary of the defence submission that Mrs Papple was entitled to use funds received from investors for her own expenses because the investment contracts allowed for the use of money for "operational requirements". The Judge interpolated the comment that the jury would need to ask itself whether that "sits happily with the specific assurances given to [four named investors] whether or not Mrs Papple actually signed them up". These were assurances that effectively guaranteed the principal sums invested.
[39] Mr Pyke said this was unfair because the assurances given to three of the four were given by Ms West not Mrs Papple, and in any event did not necessarily rule out the possibility that funds could be used for operational purposes. Only one of the four had specifically sought an assurance that funds would be held throughout in Wespap’s bank account.
[40] In fact, the evidence shows that, in relation to two of those three, Mrs Papple was present when the representation was made either by her or Ms West. In those circumstances we do not think that the point made by the Judge was incorrect, nor was he wrong to identify the assurances as being inconsistent with the defence contention on this point. The comment did not take issue with the defence contention that contracts permitted the use of money for operational requirements, but rather with the significance of that contractual provision in the context of an overall course of conduct which indicated that investors had been pursued to invest on the basis of assurances given to investors which were inconsistent with the strict wording of the contracts.
[41] The third criticism relates to the comment made by the Judge in the context of his summary of the defence contention that Mrs Papple genuinely believed that she was entitled to take substantial drawings from the money invested by investors on the basis that, to use the words attributed by the Judge to defence counsel, "you can’t ignore the fact that at that stage she was the director of a multi-million dollar business". The extent of these drawings is set out at [14] and [15] above. The Judge said the jury should ask themselves how that observation sat with the defence claim, in relation to the money invested in various overseas entities, that Mrs Papple was an inexperienced and naïve investor. Mr Pyke said this undermined the defence, and was unnecessary because the point made by the Judge had been extensively explored by the prosecutor in cross-examination and did not need further exposition from the Judge. Again we do not think that the comment was in itself unfair. It was factually accurate. It reflected the evidence before the Court. It was a point which the Crown had clearly placed in front of the jury.
[42] The fourth point relates to a comment made by the Judge in the context of his summary of the defence contention relating to count 2 in the indictment. That was the count that Mr and Mrs Papple had, with intent to defraud by false pretence caused investors, Mr and Mrs F, to execute a document evidencing an advance by falsely representing the success of themselves and Lakeland to Mr and Mrs F. The representation had taken place at a meeting in April 2001, and the agreement was signed in September 2001. Defence counsel had suggested that it was impossible to say that Mrs Papple did not believe what she was saying to Mr and Mrs F in April, the implication being that the position as at September when the contract was signed would not have been ascertainable in April. The Judge commented that this had to be read in the light of the evidence from one of the investors as to what had happened between April and September during which there were a number of communications between the investors and Mrs Papple. Mr Pyke said that the Judge’s criticism was off point, was not balanced by the evidence of the appellant in the points he made and did not give a direction on the relevance of the comments in relation to count 1 as opposed to count 2.
[43] We agree that the relevance of the evidence referred to by the Judge to the point made by defence counsel is not clearly explained to the jury. In particular the Judge makes reference to evidence by Mr F as to representations that there would be a hedge fund, which Mr Pike said was not directly on point. However, as Mr Morgan pointed out, the use of a hedge fund was one of the elements of the alleged false representation about the success of Lakeland so, although the relevance of this information was not clearly identified, it was in fact, relevant.
[44] We do not think there is any basis for the criticism that the Judge did not identify whether the comment applied to count 1 or count 2, because the whole discussion was clearly prefaced with the statement that the submission made by the defence counsel, on which the Judge was commenting, was "insofar as count 2 is concerned". Mr and Mrs F were the specific investors identified in count 2. We do not think there was any real likelihood of confusion in the minds of the jury about this.

Overall assessment

[45] Having considered each of these criticisms of the Judge’s summing up, we now turn to the overall assessment of the contention that the summing up was unbalanced. We are satisfied that it was not. The overall defence case was clearly put to the jury in extensive and generally accurate directions, and the interpolations which were made were within the boundaries of the Judge’s entitlement to comment on the evidence. The Judge made it clear that it was for the jury to determine factual matters, not for him, and that his comments should be disregarded if the jury had a different view from his.
[46] The Judge is not required to simply repeat the submissions made by defence counsel, particularly where the Judge forms the view that these are not accurate or are selective. It may be appropriate for the Judge to comment on points raised by the defence in closing which were unexpected and not mentioned in the Crown closing. While it is obviously undesirable that the Judge interpolate negative observations in his summary of the defence case at regular intervals to an extent that undermines the defence case itself, we do not think that the present summing up is in that category.
[47] Taken as a whole the summing up provided the jury with an adequate summary of the defence contentions on the issues before the jury and the Judge’s interpolations were not such that the defence case was undermined by the Judge’s observations. The essence of Mrs Papple's defence was that she had not acted dishonestly. That was squarely before the jury. It might have been preferable for the trial Judge not to set out at length elements of the Crown case when giving examples of inferences in the general part of the summing up, but this feature, when taken in the context of an extensive summing up that dealt with the Crown and defence cases in some detail, did not make the summing up unfair.
[48] This ground of appeal fails.

Count 3: verdict not supported by evidence

[49] The alternative ground of Mrs Papple’s conviction appeal relates only to the conviction on count 3. This was a particular count that Mr and Mrs Papple and Ms West, having received $100,000 from a named investor (a church) requiring them to account for it, fraudulently converted the money to their own use. A similar allegation was made in count 4, relating to funds received from another investor. Ms West was convicted on count 4 but Mrs Papple was not. Mrs Papple was, however, convicted on count 3 (though Ms West was not).
[50] The essence of the appeal on this count is that the funds received from the church were received on the basis of an agreement containing a provision that required that the principal invested remained in Wespap’s bank account until the termination date of the agreement. The pastor of the church which made the investment gave evidence that he had insisted that the principal not be moved from that bank account.
[51] Mr Pyke accepted that the contract between the church and Wespap clearly provided that the funds were to be held throughout in a Wespap bank account. But he said there was no evidence that funds had been received by Mrs Papple herself (as opposed to Wespap) and no evidence that money was received on terms which required Mrs Papple (as opposed to Wespap or Ms West) to account because there was no evidence that she knew of the special term in the contract between Wespap and the church.
[52] The Crown case was that all three accused were guilty on this count because the money solicited from the church was part of the overall scheme in which all three participated and which used Wespap as the vehicle for the funds received and the investments made. The Crown relied on the evidence which established that Mrs Papple had control over the money coming into and out of Wespap and Mrs Papple’s acceptance that the addition of the special term to the contract for the church (which was prepared by Ms West) may have been discussed with her by Ms West. The Crown also pointed to evidence of similar (but slightly less restrictive) clauses in other contracts in which Mrs Papple was herself involved. Given that context, and the jury’s acceptance of the existence of a conspiracy involving Ms West and Mrs Papple as evidence by the conviction on count 1, the Crown said that it was open to the jury to infer that, when Mrs Papple allowed the money which had been deposited into Wespap’s account by the church to be paid out to other investors in clear breach of the contractual requirement to hold it in Wespap’s account, she did so with knowledge that this was contrary to the contractual assurance given to the church.
[53] In our view this inference was available to the jury on the evidence before it. The Judge made it clear to the jury that they had to be satisfied that the individuals charged under count 3 had knowledge of the requirement to hold the money in Wespap’s account. The jury made the inference sought by the Crown. We are satisfied that the verdict is not unreasonable or unable to be supported having regard to the evidence. This ground of appeal also fails.
[54] Mr Pyke also suggested that the verdict on count 3 was inconsistent with the verdict on count 4, but we are satisfied that there is nothing in this ground. Count 4 was a similar charge in relation to a different investor. Mrs Papple denied all knowledge about his investment. If the jury accepted her denial the acquittal on count 4 would have no bearing on the conviction on count 3. No inconsistency arises.
[55] We dismiss Mrs Papple’s appeal against conviction.

Sentence appeals

[56] The Judge sentenced Mrs Papple to five years imprisonment for the conspiracy charge (count 1) and concurrent terms of 18 months imprisonment for counts 2 and 3. The sentence imposed on Ms West was the same: five years imprisonment for the conspiracy charge, and 18 months imprisonment (concurrent) on the other charge on which she was found guilty, count 4.
[57] Mrs Papple’s appeal against sentence was not pursued. It was accepted that the five year sentence (which is the maximum term for the conspiracy offence) was appropriate, given the amounts involved and Mrs Papple’s prior convictions. Mr Pyke said the sentence would have been challenged only if her appeal against the conviction on count 3 had succeeded. We formally dismiss Mrs Papple’s sentence appeal.
[58] Mr Bioletti also accepted that the five year term imposed on Ms West could not realistically be challenged in the light of the extended period of offending, her past record and the severe impact on the victims. However he sought to convince us that the acquittal on count 3 indicated that the jury must have thought that Ms West’s involvement in the conspiracy was for a much shorter time than that of Mrs Papple. On that basis he suggested that the lower sentence would be appropriate.
[59] We do not accept this submission. The acquittal on count 3 did not undermine the conviction on the conspiracy count, which involved numerous actions on the part of Ms West throughout the period to which the charge related (including the period prior to the event which was the basis for count 3).
[60] Mr Bioletti also raised a disparity argument. He said Mr Papple had been sentenced after he was convicted at his retrial on count 1 to a term of imprisonment of two years and granted leave to apply for home detention. He said this raised an issue of disparity with the five year sentence imposed on Ms West.
[61] We have considered the sentencing notes for Mr Papple and are satisfied that no disparity issue arises in this case. The Judge was satisfied that Mr Papple had a lesser role in the conspiracy, that his criminal involvement developed towards the end of the period referred to in the charge, that he was under Mrs Papple’s control and that he had become involved in the conspiracy out of a sense of misguided loyalty to his wife. In short, his culpability was less than that of Mrs Papple or Ms West.
[62] We dismiss Ms West’s sentence appeal.

Result

[63] Both appellants’ appeals against conviction and sentence are dismissed.

Solicitors:
Crown Law Office, Wellington

NZLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.nzlii.org/nz/cases/NZCA/2006/276.html

[1]	Mrs Papple and Ms West were convicted of a number of fraud charges after a jury trial in the District Court. The trial Judge, Judge Weir, sentenced them both to imprisonment for five years. They appeal to this Court against both conviction and sentence.
[2]	Ms West’s conviction appeal is based on an allegation that there was a misdirection in the Judge’s summing up on the position of co-conspirators. Mrs Papple’s appeal is based on a number of criticisms of the Judge’s summing up, particularly the direction on inferences. There is also a general allegation that the summing up was unfair to the defence.
[3]	The sentence appeals are pursued on the basis that the sentences imposed on the conspiracy charge (five years imprisonment), being the maximum for that offence, were manifestly excessive.
[4]	In order to provide some background to the matters raised in relation to the summing up, it is necessary to set out some of the background to the offending and to the outcome of the trial.

[6]	Mr Papple was subsequently convicted after a retrial of conspiracy to defraud, sentenced to imprisonment for two years and granted leave to apply for home detention. There was no retrial on counts 5 and 6 because a stay was issued by the Solicitor-General.
[7]	The following description of the Crown case against the appellant is based on the summary of the case set out in the Judge’s sentencing notes.
[8]	The convictions arose out of the appellants’ involvement in the operation and control of two companies, Lakeland Wealth Creators Limited (Lakeland) of which Mrs Papple was the sole director and shareholder, and Wespap Limited of which Ms West was initially a director and shareholder. She later resigned as a director, but retained her shareholding and effective control of the company. The Crown case was that, over a period of two years, from September 2000 to September 2002, during their operation of these companies, the appellants had defrauded the public of a minimum of $8.3 million of the $14.6 million in investments received.
[9]	The activities which led to the convictions commenced when Mrs Papple was introduced to Ms West, a director and shareholder of FF Traders Limited, which was in the business of procuring people to invest money on the basis that spectacular returns would be guaranteed. Mrs Papple personally invested in FF Traders and did receive the very good returns initially. Apparently encouraged by this, she set up Lakeland in September 2000 and then Wespap in May 2001 for the purpose of carrying on a similar business. These investments were generally referred to as off-shore investment opportunities or trades. In fact, FF Traders was unsuccessful in itself. By way of example, Lakeland invested $1.5 million in FF Traders and got back only approximately $850,000. There were no returns after April 2001 to Lakeland from FF Traders.
[10]	Apart from FF Traders, Lakeland and Wespap invested in highly speculative schemes which, in truth, were just frauds themselves. The Judge was prepared to accept that initially Mrs Papple was naïve. Her naivety was induced because of the returns she had received on her own investment through FF Traders. The Judge said this was evidenced also to some degree by the fact that some of the initial investments of Lakeland were on behalf of friends or whanau of Mrs Papple. But the activities of that company and later Wespap extended beyond that to members of the public.
[11]	The appellants’ method of soliciting funds from investors was to offer high returns, ranging from an effective interest rate of 3% per month up to 10% per month and sometimes even higher. Both appellants held themselves out as having been very successful with earlier investments and therefore guaranteed the principal of the investors. They would then use the fresh investment money to pay the very high returns guaranteed to early investors. As the net widened and as the appellants’ need for money increased, these guarantees became more and more extravagant, so that in some cases they guaranteed not only the principal but also the interest. Towards the end there were guarantees that the investment funds themselves would be held frozen in a New Zealand account and would never leave the country. None of those representations were true.
[12]	What actually happened was that the investments which the appellants made through Lakeland and Wespap were unsuccessful and they used the fresh funds coming in from the new investors to initially pay the promised returns to the earlier investors. The Judge found the fact that these investments were unsuccessful had to be known to the appellants. He said this was evidenced by the fact that in respect of Lakeland the last investment of $300,000 was made in September 2001. Yet between September 2001 and September 2002 Lakeland received over $6.5 million from investors which was not invested. The scheme had many of the features of a classic "Ponzi" scheme.
[13]	The Judge said much of the money received from investors had gone to the appellants. Over the period of time between September 2001 and September 2002, over $4.5 million was paid out to earlier investors as so called profit returns. Over $1.6 million was paid to personal accounts operated by Mrs Papple or other parties on her behalf.
[14]	The evidence presented by the Serious Fraud Office accountant, Ms Peden, was that from approximately September 2000 to September 2002 funds were invested as follows (we have rounded the figures to simplify the analysis):

[17]	Mr Bioletti argued that this direction was insufficient and that there was need for a direction in the use to which evidence can be put under the co-conspirators rule.
[18]	After the written submissions of Crown counsel were received, Mr Bioletti moved away from this argument in oral submissions. He accepted that this was not a case in which the co-conspirators rule was in issue because the Crown had not relied on the acts and statements of one conspirator which had been carried out or said in the absence of another conspirator to prove participation of the absent conspirator in the conspiracy.
[19]	However, he then pursued another angle in his oral submissions. He said there was still a lack of direction to the jury on what types of evidence could be used to establish the existence of a conspiracy, and that this had led to a miscarriage of justice.
[20]	We do not think there is anything in this point. The Crown case was essentially that the accused had participated in a combined effort in which all had active roles involving joint actions (that is, actions by one which actively involved the others or were undertaken in the presence of the others). There is no basis for suggesting that the Judge’s direction led to a miscarriage in relation to Ms West.
[21]	The direction which the Judge gave was in conventional terms and was, if anything, favourable to the defence in relation to the conspiracy charge. Mr Bioletti acknowledged this in argument. We are satisfied that the directions given by the Judge on the need for the jury to satisfy itself from the evidence presented in relation to each accused that the particular accused was a participant in the conspiracy was sufficient in the circumstances of this case. Accordingly, Ms West’s appeal against conviction fails and is dismissed.

[23]	There were a number of aspects to the complaints about the summing up, but the overall allegation is that the summing up was too favourable to the Crown, and as a result the defence case was not fairly represented to the jury.
[24]	The starting point is the defence case. Mr Pyke put it in these terms:

[29]	There then followed three paragraphs, each containing a discussion of an aspect of the evidence which the Crown relied on in support of its contention that Mrs Papple had acted dishonestly rather than, as the defence contended, incompetently and naively. The Judge did not specifically detail what inference should be drawn from each of these elements of the evidence, but it could be taken from the introductory wording referred to above that the Crown relied on each element as supporting an inference of dishonesty and therefore guilt on the part of Mrs Papple.
[30]	Mr Pyke criticised this aspect of the summing up on two bases. The first was that the "examples" were not really examples or, if they were, they were inappropriate examples of the jury’s entitlement to draw inferences from proven facts. In effect, they were summaries of elements of the Crown case taken in isolation from the rest of the Crown case, and separated from the later discussion of the defence case.
[31]	We agree that, taken in isolation, this was an unsatisfactory aspect of the summing up. In effect it isolated three elements of the Crown case from the overall discussion of the Crown and defence cases, and placed them before the jury in the context of the introductory and generic directions to the jury which the Judge said he would give before turning to the features of the particular case. We do not think this is best practice, though we accept, of course, that an inferences direction can be and often is helpfully supported by an example of the drawing of an inference and that it can be helpful to use an example from the case at hand. But the examples in this case were not examples of the jury inferring a particular point from proven evidence, but rather aspects of the Crown case aimed at establishing the ultimate issue of guilt or innocence. They were dealt with at some length.
[32]	That said, however, the issue of balance in a summing up can be evaluated only by considering the summing up as a whole. Before doing that, we turn to the second aspect of the criticism made by Mr Pyke.

[33]	The criticism of the way the Judge summarised the defence case for Mrs Papple is not a criticism of the adequacy or comprehensiveness of the summary. Rather, the criticism focuses on a number of comments which the Judge interpolated in his summary of the closing submissions made by Mrs Papple’s trial counsel. It was argued that these undermined the defence case and were unfair.
[34]	The comments which were the subject of this criticism follow.
[35]	The Judge referred to the criticism made by Mrs Papple’s trial counsel of the Crown’s position that the investments made by Lakeland were "ridiculous". The defence position was that there had been some success at the outset, and that other people had been "taken in" as well as Mrs Papple. Defence counsel made particular reference to one very experienced investor who had invested with Mrs Papple, Mr H, as an example of another person who had been "taken in".
[36]	The Judge noted that the defence counsel’s submission that Mr H been taken in was correct, but then added a qualification to the effect that Mr H had given evidence that he had invested for three reasons: (1) the successful investment made by another experienced investor, which the Judge noted had resulted from a payment being made to that investor by Ms West personally; (2) the written and verbal confirmation that Mr H’s principal would not be at risk and; (3) the assurances he received from Mrs Papple about the success of previous trades.
[37]	Mr Pyke said this comment was unnecessary because it did not meet defence counsel’s point that the fact that Mr H was taken in supported the defence case that Mrs Papple was too. We disagree. In our view the qualification was directed to the point made by defence counsel and was not, in itself, unfair. The Judge’s summary of what Mr H had said were his reasons for investing was accurate.
[38]	The second comment came in the context of the Judge’s summary of the defence submission that Mrs Papple was entitled to use funds received from investors for her own expenses because the investment contracts allowed for the use of money for "operational requirements". The Judge interpolated the comment that the jury would need to ask itself whether that "sits happily with the specific assurances given to [four named investors] whether or not Mrs Papple actually signed them up". These were assurances that effectively guaranteed the principal sums invested.
[39]	Mr Pyke said this was unfair because the assurances given to three of the four were given by Ms West not Mrs Papple, and in any event did not necessarily rule out the possibility that funds could be used for operational purposes. Only one of the four had specifically sought an assurance that funds would be held throughout in Wespap’s bank account.
[40]	In fact, the evidence shows that, in relation to two of those three, Mrs Papple was present when the representation was made either by her or Ms West. In those circumstances we do not think that the point made by the Judge was incorrect, nor was he wrong to identify the assurances as being inconsistent with the defence contention on this point. The comment did not take issue with the defence contention that contracts permitted the use of money for operational requirements, but rather with the significance of that contractual provision in the context of an overall course of conduct which indicated that investors had been pursued to invest on the basis of assurances given to investors which were inconsistent with the strict wording of the contracts.
[41]	The third criticism relates to the comment made by the Judge in the context of his summary of the defence contention that Mrs Papple genuinely believed that she was entitled to take substantial drawings from the money invested by investors on the basis that, to use the words attributed by the Judge to defence counsel, "you can’t ignore the fact that at that stage she was the director of a multi-million dollar business". The extent of these drawings is set out at [14] and [15] above. The Judge said the jury should ask themselves how that observation sat with the defence claim, in relation to the money invested in various overseas entities, that Mrs Papple was an inexperienced and naïve investor. Mr Pyke said this undermined the defence, and was unnecessary because the point made by the Judge had been extensively explored by the prosecutor in cross-examination and did not need further exposition from the Judge. Again we do not think that the comment was in itself unfair. It was factually accurate. It reflected the evidence before the Court. It was a point which the Crown had clearly placed in front of the jury.
[42]	The fourth point relates to a comment made by the Judge in the context of his summary of the defence contention relating to count 2 in the indictment. That was the count that Mr and Mrs Papple had, with intent to defraud by false pretence caused investors, Mr and Mrs F, to execute a document evidencing an advance by falsely representing the success of themselves and Lakeland to Mr and Mrs F. The representation had taken place at a meeting in April 2001, and the agreement was signed in September 2001. Defence counsel had suggested that it was impossible to say that Mrs Papple did not believe what she was saying to Mr and Mrs F in April, the implication being that the position as at September when the contract was signed would not have been ascertainable in April. The Judge commented that this had to be read in the light of the evidence from one of the investors as to what had happened between April and September during which there were a number of communications between the investors and Mrs Papple. Mr Pyke said that the Judge’s criticism was off point, was not balanced by the evidence of the appellant in the points he made and did not give a direction on the relevance of the comments in relation to count 1 as opposed to count 2.
[43]	We agree that the relevance of the evidence referred to by the Judge to the point made by defence counsel is not clearly explained to the jury. In particular the Judge makes reference to evidence by Mr F as to representations that there would be a hedge fund, which Mr Pike said was not directly on point. However, as Mr Morgan pointed out, the use of a hedge fund was one of the elements of the alleged false representation about the success of Lakeland so, although the relevance of this information was not clearly identified, it was in fact, relevant.
[44]	We do not think there is any basis for the criticism that the Judge did not identify whether the comment applied to count 1 or count 2, because the whole discussion was clearly prefaced with the statement that the submission made by the defence counsel, on which the Judge was commenting, was "insofar as count 2 is concerned". Mr and Mrs F were the specific investors identified in count 2. We do not think there was any real likelihood of confusion in the minds of the jury about this.

[45]	Having considered each of these criticisms of the Judge’s summing up, we now turn to the overall assessment of the contention that the summing up was unbalanced. We are satisfied that it was not. The overall defence case was clearly put to the jury in extensive and generally accurate directions, and the interpolations which were made were within the boundaries of the Judge’s entitlement to comment on the evidence. The Judge made it clear that it was for the jury to determine factual matters, not for him, and that his comments should be disregarded if the jury had a different view from his.
[46]	The Judge is not required to simply repeat the submissions made by defence counsel, particularly where the Judge forms the view that these are not accurate or are selective. It may be appropriate for the Judge to comment on points raised by the defence in closing which were unexpected and not mentioned in the Crown closing. While it is obviously undesirable that the Judge interpolate negative observations in his summary of the defence case at regular intervals to an extent that undermines the defence case itself, we do not think that the present summing up is in that category.
[47]	Taken as a whole the summing up provided the jury with an adequate summary of the defence contentions on the issues before the jury and the Judge’s interpolations were not such that the defence case was undermined by the Judge’s observations. The essence of Mrs Papple's defence was that she had not acted dishonestly. That was squarely before the jury. It might have been preferable for the trial Judge not to set out at length elements of the Crown case when giving examples of inferences in the general part of the summing up, but this feature, when taken in the context of an extensive summing up that dealt with the Crown and defence cases in some detail, did not make the summing up unfair.
[48]	This ground of appeal fails.

[49]	The alternative ground of Mrs Papple’s conviction appeal relates only to the conviction on count 3. This was a particular count that Mr and Mrs Papple and Ms West, having received $100,000 from a named investor (a church) requiring them to account for it, fraudulently converted the money to their own use. A similar allegation was made in count 4, relating to funds received from another investor. Ms West was convicted on count 4 but Mrs Papple was not. Mrs Papple was, however, convicted on count 3 (though Ms West was not).
[50]	The essence of the appeal on this count is that the funds received from the church were received on the basis of an agreement containing a provision that required that the principal invested remained in Wespap’s bank account until the termination date of the agreement. The pastor of the church which made the investment gave evidence that he had insisted that the principal not be moved from that bank account.
[51]	Mr Pyke accepted that the contract between the church and Wespap clearly provided that the funds were to be held throughout in a Wespap bank account. But he said there was no evidence that funds had been received by Mrs Papple herself (as opposed to Wespap) and no evidence that money was received on terms which required Mrs Papple (as opposed to Wespap or Ms West) to account because there was no evidence that she knew of the special term in the contract between Wespap and the church.
[52]	The Crown case was that all three accused were guilty on this count because the money solicited from the church was part of the overall scheme in which all three participated and which used Wespap as the vehicle for the funds received and the investments made. The Crown relied on the evidence which established that Mrs Papple had control over the money coming into and out of Wespap and Mrs Papple’s acceptance that the addition of the special term to the contract for the church (which was prepared by Ms West) may have been discussed with her by Ms West. The Crown also pointed to evidence of similar (but slightly less restrictive) clauses in other contracts in which Mrs Papple was herself involved. Given that context, and the jury’s acceptance of the existence of a conspiracy involving Ms West and Mrs Papple as evidence by the conviction on count 1, the Crown said that it was open to the jury to infer that, when Mrs Papple allowed the money which had been deposited into Wespap’s account by the church to be paid out to other investors in clear breach of the contractual requirement to hold it in Wespap’s account, she did so with knowledge that this was contrary to the contractual assurance given to the church.
[53]	In our view this inference was available to the jury on the evidence before it. The Judge made it clear to the jury that they had to be satisfied that the individuals charged under count 3 had knowledge of the requirement to hold the money in Wespap’s account. The jury made the inference sought by the Crown. We are satisfied that the verdict is not unreasonable or unable to be supported having regard to the evidence. This ground of appeal also fails.
[54]	Mr Pyke also suggested that the verdict on count 3 was inconsistent with the verdict on count 4, but we are satisfied that there is nothing in this ground. Count 4 was a similar charge in relation to a different investor. Mrs Papple denied all knowledge about his investment. If the jury accepted her denial the acquittal on count 4 would have no bearing on the conviction on count 3. No inconsistency arises.
[55]	We dismiss Mrs Papple’s appeal against conviction.

[56]	The Judge sentenced Mrs Papple to five years imprisonment for the conspiracy charge (count 1) and concurrent terms of 18 months imprisonment for counts 2 and 3. The sentence imposed on Ms West was the same: five years imprisonment for the conspiracy charge, and 18 months imprisonment (concurrent) on the other charge on which she was found guilty, count 4.
[57]	Mrs Papple’s appeal against sentence was not pursued. It was accepted that the five year sentence (which is the maximum term for the conspiracy offence) was appropriate, given the amounts involved and Mrs Papple’s prior convictions. Mr Pyke said the sentence would have been challenged only if her appeal against the conviction on count 3 had succeeded. We formally dismiss Mrs Papple’s sentence appeal.
[58]	Mr Bioletti also accepted that the five year term imposed on Ms West could not realistically be challenged in the light of the extended period of offending, her past record and the severe impact on the victims. However he sought to convince us that the acquittal on count 3 indicated that the jury must have thought that Ms West’s involvement in the conspiracy was for a much shorter time than that of Mrs Papple. On that basis he suggested that the lower sentence would be appropriate.
[59]	We do not accept this submission. The acquittal on count 3 did not undermine the conviction on the conspiracy count, which involved numerous actions on the part of Ms West throughout the period to which the charge related (including the period prior to the event which was the basis for count 3).
[60]	Mr Bioletti also raised a disparity argument. He said Mr Papple had been sentenced after he was convicted at his retrial on count 1 to a term of imprisonment of two years and granted leave to apply for home detention. He said this raised an issue of disparity with the five year sentence imposed on Ms West.
[61]	We have considered the sentencing notes for Mr Papple and are satisfied that no disparity issue arises in this case. The Judge was satisfied that Mr Papple had a lesser role in the conspiracy, that his criminal involvement developed towards the end of the period referred to in the charge, that he was under Mrs Papple’s control and that he had become involved in the conspiracy out of a sense of misguided loyalty to his wife. In short, his culpability was less than that of Mrs Papple or Ms West.
[62]	We dismiss Ms West’s sentence appeal.