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Court of Appeal of New Zealand |
Last Updated: 28 December 2011
IN THE COURT OF APPEAL OF NEW ZEALAND
CA307/05THE QUEENv
WILLIAM HENRY HAWKENHearing: 16 March 2006
Court: Chambers, Ronald Young and Allan JJ
Counsel: M A Kennedy for
Appellant
M J Ruffin
for Crown
Judgment: 5 May 2006 at 2.15 pm
|
JUDGMENT OF THE COURT
|
REASONS
(Given by Ronald Young J)
Table of Contents
Factual background [3]
Count 2 [4]
Submissions [13]
New evidence [15]
The
issues [19]
Entitlement to
issue tax invoice [20]
No evidence of
intention to defraud [24]
Count 3 [27]
Submissions [32]
Discussion [34]
Count 9 [41]
Additional comments [49]
Sentencing [53]
Reparation [55]
Return to prison [57]
[1] Mr Hawken faced trial by Judge alone on indictment on six counts of using a document with intent to defraud (s 229A(b) Crimes Act 1961), two of forgery (s 264 Crimes Act) and one of knowingly not providing information (s 143B(1)(b) and (f) Tax Administration Act 1994).
[2] He was convicted by Judge Singh after trial on four counts of using a document with intent to defraud (counts 2, 3, 6 and 7) one count of forgery (count 8) and one count of knowingly not providing information (count 9). He was acquitted on two counts of using a document with intent to defraud (counts 1 and 4) and one count of forgery (count 5). He was sentenced to 12 months imprisonment and ordered to pay reparation of $120,000 to Inland Revenue Department (“IRD”). He filed appeals against all convictions, however, during the course of argument, appeals against convictions on counts 6, 7 and 8 were abandoned by counsel for the appellant. This left the appeals against counts 2, 3 and 9 to be considered by this Court.
Factual background
[3] The appellant was a property dealer who had an interest in a number of companies. In 2000 Inland Revenue began investigating a number of claims for refunds of GST on property sales involving Mr Hawken and associated companies. At trial the Crown case was that in several land sales Mr Hawken, on behalf of companies in which he had a direct or indirect interest, made claims for refunds of GST knowing they were false and on occasions supported by false documents created by him.
Count 2
[4] Count 2 involved the purported sale of land at Kerikeri on 18 December 1998 by RKB Holdings Ltd (“RKB”) as vendor to Rarere Developments Ltd (“RDL”) as purchaser. Count 2 alleged as follows:
2 THE said Crown Solicitor further charges that WILLIAM HENRY HAWKEN together with RARERE DEVELOPMENTS LIMITED between 9 April 1999 and 14 April 1999, at Auckland, with intent to defraud, used documents namely a Goods and Services Tax return in the name of RARERE DEVELOPMENTS LIMITED for the period between 1 February 1999 to 28 February 1999; an agreement for sale and purchase dated 18 December 1998 between RKB HOLDINGS LIMITED and RARERE DEVELOPMENTS LIMITED in respect of property at Rarere Terrace, Kerikeri, Northland in the sum of $310,000; and an invoice dated 21 December 1998 from RKB HOLDINGS LIMITED to RARERE DEVELOPMENTS LIMITED in the sum of $310,000; being documents capable of being used to obtain a pecuniary advantage, for the purpose of obtaining for RARERE DEVELOPMENTS LIMITED or another a pecuniary advantage.
[5] The land to be sold was described as:
Address of property: Rarere Terrace, Kerikeri, Northland
Legal Description: Area 1.1471 ha, lot 35, DP148704 CT88/607
Being lots 34, 35, 37 and 3 containing a total of .8464m2 on a plan of subdivision attached hereto of lot 35 on DP148074 and being part of the old land claim No. 3 shown on CT88/607.
[6] As to the deposit, the agreement said:
$15,000 payable on resource consent to (?) on dwelling being obtained.
[7] And the purchase price of $310,000 was payable:
In cash in one lump sum 5 days after the issue of title to the subdivision shown on the attached plan.
[8] Possession date was “upon the payment of the balance of the purchase price”. And a special condition at paragraph 16 provided:
The purchaser shall be entitled to enter upon the land for the purpose of arranging the granting of resource consents for the construction of a dwelling and for the purposes of constructing the dwelling in a proper and workmanlike manner at any time after the payment of the deposit but before settlement occurred.
[9] The appellant signed the agreement as a director of RKB. The Judge could not identify who signed on behalf of RDL. On 24 November 1998 (before the agreement to sell the land was signed) Ms Robyn Brailsford, the sole director of RDL, signed a power of attorney in favour of the appellant. This entitled Mr Hawken to sign RDL company documents on behalf of Ms Brailsford; indeed, it purported to permit Mr Hawken to sign her actual name. The agreement for the sale of the land was signed “R L Brailsford” on behalf of RDL. As to this the Judge concluded:
[72] I suspect it is the accused’s signature as it differs from RL Brailsford’s signature on Exhibits WHH E207, E208 and E209/1.
[73] However, in the absence of evidence from R L Brailsford, I cannot for sure say that the signature is in the accused’s handwriting.
[10] What is clear is that the accused signed a GST tax invoice on behalf of RKB on 21 December 1998 which was provided to RDL relating to the sale of the land. RDL, through the appellant exercising the power of attorney, on 28 February 1999 filed a GST tax return seeking a refund of the GST on the sale of the land. In support of this return the appellant filed the tax invoice provided by RKB (signed by him) and a copy of the agreement for sale and purchase relating to Rarere Terrace.
[11] The appellant’s case at trial was that the agreement for sale and purchase of the land was unconditional when the GST refund was sought by him on RDL’s behalf on 28 February 1999. The appellant’s case was that if the agreement was unconditional as at 28 February 1999 then he could not be guilty of fraudulent use of a document because he had been entitled in law to seek a refund of the GST on the transaction. As to this the Judge said:
[82] Without rehearsing all the evidence, very briefly, the evidence is very clear that the S & P was conditional on the approval of the subdivision, and in particular, the issue of titles to the lots being purchased by RDL: Exhibit E130/3.
[83] This is not to be confused with the resource consent the purchaser, RDL, was to have arranged for the construction of a dwelling on the property.
[84] On 22 October 1999, the accused advised S Tata, IRD Officer, that RKB still had the property, awaiting resource consent on an application that had been lodged approximately three months ago.
. . .
[89] As at 11 January 2001, the Rarere Developments Terrace property was still held in the name of RKB.
[12] The Judge said he was satisfied all the elements of the charge had been established including an intention to defraud and convicted the appellant.
Submissions
[13] The appellant’s case was that at the time the appellant, on behalf of RDL, sought from IRD a refund of the GST on the sale he was entitled to such a refund because the contract for the sale of the land was then unconditional. The appellant says once a contract for the sale of the land becomes unconditional the purchaser is entitled to seek a refund of the GST on the transaction. The appellant submitted that there can be no fraud, therefore, where a legitimate GST refund is sought. The appellant also submitted that the Crown had no evidence upon which the Judge could properly infer an intention to defraud.
[14] The Crown case was that the agreement to sell the land was subject to the implied condition that the subdivision itself had to actually occur and titles to the new sections issue. Only then, they submitted, did the purchaser RDL have an obligation to pay the purchase price. They submitted that at the time the GST refund was sought by RKB, on 28 February 1999, the purchase price was not payable and so no tax invoice should have been issued by RKB because no taxable supply had ever been made (see s 24(1) Goods and Services Tax Act 1985).
New evidence
[15] Counsel for the appellant sought leave to introduce “new” evidence in this Court (see s 389 Crimes Act). This was opposed by the Crown. However, if allowed by this Court the Crown also sought to introduce further evidence. This was not opposed by counsel for the appellant. The “new” evidence relates to the question of whether there was resource consent to the subdivision in Rarere Terrace at the time the GST refund return was made on 28 February 1999. The Judge concluded that at 28 February the agreement was conditional in part because “approval of the subdivision” had not been given. This conclusion was reasonably open to the Judge on the basis of the evidence he heard at trial.
[16] This conclusion seems to have arisen because of confusion between Mr Killalea, the resource consents manager of the Far North District Council, surveyors Thompson and King, and Ms Tata of Inland Revenue. The evidence at the trial was that in October 1999 Ms Tata spoke to Mr Hawken. Mr Hawken said he had filed a consent application “approximately three months” before the interview in October and the application was still being considered by the Council. In fact the application before the Council was an application to vary an existing resource consent by providing for a different access to the subdivision. Thus when Mr Killalea wrote to IRD on 4 April 2000 informing them of a resource consent application filed on 27 September 1999 and still unresolved, he was corresponding about the application for variation of the original resource consent.
[17] An affidavit by Mr Killalea clears up the confusion. He confirms that a resource consent for the subdivision was granted by the Far North District Council on 17 January 1996 and the subdivision plan relating to the approval was sealed on 29 January 1998. It seems probable that at the time RKB and RDL agreed to the sale of the land the appellant did not know about the existence of this resource consent.
[18] On the basis of this new evidence, accepted by both the appellant and the Crown as accurate, the Judge’s conclusion that the contract was conditional on the approval of the subdivision was wrong. In these circumstances we consider it is expedient in the interests of justice that this evidence be produced to the Court to consider in this appeal (see s 389(a) Crimes Act). However, for reasons which we will give we do not consider this evidence assists Mr Hawken in this appeal.
The issues
[19] Two issues arise on this part of the appeal:
(a) Was RKB through Mr Hawken entitled to issue the tax invoice for $310,000 on 21 December 1998?
(b) If not, when the appellant sought the GST refund on behalf of RDL, did the Crown establish that the appellant must have known RDL was not entitled to the refund and that therefore he intended to defraud?
Entitlement to issue tax invoice
[19] We consider the answer to (a) is no. The agreement provided that the deposit was only payable if resource consent to a dwelling house on the section was obtained. This had not occurred by 21 December 1998 and indeed has never been fulfilled. Thus, neither the deposit nor the purchase price were ever payable in terms of the agreement. No obligation to pay the purchase price ever existed and so no taxable supply was ever made which would trigger an entitlement to issue a tax invoice.
[21] Secondly, although it now appears that a resource consent had been granted for the subdivision, the agreement remained conditional by virtue of s 225 of the Resource Management Act 1991 until the survey plan was approved. Section 225(1) provides as follows:
- Agreement to sell land or building before deposit of plan
(1) Any agreement to sell any land or any building or part of any building that constitutes a subdivision and is made before the appropriate survey plan is approved under section 223, shall be deemed to be made subject to a condition that the survey plan will be deposited under the Land Transfer Act 1952 or in the Deeds Register Office, as the case may be; and no such agreement is illegal or void by reason that it was entered into before the survey plan was deposited.
[22] No survey plan has ever been approved pursuant to s 223 by the Far North District Council. Thus the agreement was still conditional as at 28 February 1999 and therefore no purchase price was payable and thus no supply had taken place and no tax invoice could lawfully be issued.
[23] We therefore agree with the Judge that the agreement was conditional on resource consent for a dwelling and conditional (by virtue of s 225 Resource Management Act) on a survey plan approval for the subdivision by the Far North District Council. We are therefore satisfied no valid GST refund could have been sought on 28 February 1999.
No evidence of intention to defraud
[24] The second point raised by the appellant in relation to count 2 was that the Judge could not be satisfied that the appellant had an intention to defraud when he filed the GST return. As to this issue the Judge took into account that in his view the agreement for sale and purchase was conditional when the GST refund claim was made. He said:
[84] On 22 October 1999, the accused advised S Tata, IRD Officer, that RKB still had the property, awaiting resource consent on an application that had been lodged approximately three months ago.
[85] Application for resource consent was lodged subsequently on 10 November 1999.
[86] On inquiry by the IRD, the accused stated that his:
Recollection is that the agreement was unconditional ... I am unaware as to whether the transaction was completed ...
. . .
[89] As at 11 January 2001, the Rarere Developments Terrace property was still held in the name of RKB.
[90] I have had regard to directions on lies and inferences, as well as the onus and standard of proof.
. . .
[94] On the evidence, I am satisfied beyond reasonable doubt that the accused had intended to defraud.
[25] The Judge in his reasoning focused on what the appellant did and thought at the end of 1999. He was wrong to do so. Count 2 is concerned with what the appellant believed in February 1999. However, we are able to infer that Mr Hawken must have been aware in February 1999 that the agreement was still conditional and therefore no money was payable under it by RDL.
[26] The tax invoice generated by RKB to RDL was the document which gave rise to the GST refund claim. Mr Hawken accepted it was signed by him and that he presented it to IRD for the purpose of seeking a GST refund on behalf of RDL. Mr Hawken must have known that the purchase price was not payable in terms of the agreement for sale and purchase. He would have known as the sole director of RKB that it had not deposited any plan or proceeded towards the issuing of titles, and thus he would have known that RKB had done nothing to fulfil the prerequisites for payment of the purchase price by RDL. On these facts it was open to infer in the absence of any alternative credible explanation that the Crown had established beyond reasonable doubt the appellant intended to defraud the IRD when he sought the GST refund on behalf of RDL. We reject this ground of appeal.
Count 3
[27] The indictment for count 3 charged as follows:
- THE said Crown Solicitor further charges that WILLIAM HENRY HAWKEN together with RKB HOLDINGS LIMITED between 2 June 1999 and 14 June 1999, at Auckland, with intent to defraud, used documents namely a Goods and Services Tax return in the name of RKB HOLDINGS LIMITED for the period between 1 April 1999 to 31 May 1999; an attached agreement for sale and purchase dated 28 April 1999 between HEATHERLEA FARMS PARTNERSHIP and RKB HOLDINGS LIMITED or nominee in respect of land being Lot 1 of Pt Lot 15 and Lot 22, Deposited Plan 919 Pt Allot 127 being land at the corner of State Highway One and Prescott Road, Ruakaka in the sum of $160,000; and an agreement for sale and purchase dated 28 April 1999 between HEATHERLEA FARMS PARTNERSHIP and RKB HOLDINGS LIMITED or nominee in respect of land being Lot 14 of Pt Lot 15, Deposited Plan 919 Pt Allot 127 being land at the corner of State Highway One and Prescott Road, Ruakaka in he sum of $150,000; and an invoice dated 28 April 1999 purporting to be an invoice from HEATHERLEA FARMS PARTNERSHIP to RKB HOLDINGS LIMITED in the sum of $310,000; being documents capable of being used to obtain a pecuniary advantage, for the purpose of obtaining for RKB HOLDINGS LIMITED or another a pecuniary advantage.
[28] The appellant’s case was that the agreement for sale and purchase relating to this charge was unconditional when he filed the GST return and so RKB was entitled to the refund and that the Crown could not prove beyond reasonable doubt an intention to defraud by him.
[29] This transaction involves an alleged purchase of land by RKB from Heatherlea Farms partnership. There were two agreements for sale and purchase. The first, dated 28 April 1999, was for the sale of 3.9 ha of land at Ruakaka for $160,000. And the second was an agreement of the same date involving the same parties for 4.2 ha of land also at Ruakaka for $150,000. Both pieces of land were part of a larger block of land and were to be subdivided from it. While the agreement was not expressly subject to resource consent, the deposit of a plan and the issue of titles, s 225(1) of the Resource Management Act provided that the contract was conditional upon the deposit of the survey plan. Both agreements were signed by Mr Morris, one of two partners in Heatherlea Farms. Mr Morris told Mr Hunt, Mr Hawken’s and RKB’s agent, that he was signing “subject to Mr Laurie [the other partner] countersigning them [the two agreements]”. Mr Laurie refused to sign the agreements.
[30] In the GST return for the two month period from 1 April 1999 to 31 May 1999 Mr Hawken as the sole director of RKB sought a refund of the GST on these transactions totaling $35,224.72. The documents accompanying the GST refund claim were the two agreements for sale and purchase, and a tax invoice said to be from Heatherlea Farms partnership to RKB for the total purchase price of the two properties of $310,000. The claim for a refund was made on 2 June 1999 and paid by the IRD on 14 June 1999.
[31] The Judge said in relation to this count:
[104] On the evidence, no deposit was ever paid and the settlement did not take place on 31 March 2000.
[105] Under the cover of letter dated 2 June 1999, RKB enclosed the GST Return signed by the accused as Director, together with the two S & P and an invoice purportedly from HFP.
[106] Crown witness W. Morris, M. Laurie and M. Ford gave evidence that the said tax invoice was not generated by HFP.
[107] G. Hunt’s evidence relating to the tax invoice appears confused. At p 310 lines 8 to 18 of the Notes of Evidence, Hunt states that I think I handed it to [Ford and Morris] with the agreement.”
[108] Further, Hunt states that “well I am pretty sure. I can’t be 100 percent sure ... I would say it definitely was handed to him.” (p. 310 lines 15 to 18).
[109] At page 311 lines 10 to 13, Hunt states: “I don’t know where it came from you know.”
[110] When asked whether it followed that the tax invoice came from the accused, Hunt replied: “well I think it must have you know.” ....(p311, lines 30-34)
[111] I found Hunt’s evidence ambivalent and unreliable on this issue.
[112] According to M. Laurie, there were some strange circumstances surrounding these deals. (Notes of Evidence p239 lines 15-17, p 240 lines 10-11).
[113] In cross-examination, Laurie did not rule out the possibility that Hunt may have got the GST number from Morris.
[114] Morris denied preparing the tax invoice.
[115] Whilst I accept that the tax invoice was not authorised by Ford, I cannot be sure that it was generated by the accused. On this issue I must give him the benefit of doubt.
[116] There is no evidence to show that the accused was aware that Laurie had refused to sign the S & P.
[117] In my view, the S & P was in place.
. . .
[123] The only remaining issue is: whether the using of the documents done with intent to defraud.
[124] It is obvious from the S & P that both agreements were conditional on the issue of titles.
[125] Exhibit RKB E1/5&12 is proposed Subdivision Plan.
[126] Condition 16.1 clearly states that the purchaser will take title subject to, inter alia, the terms of consent and of the plan of subdivision: RKB E1/6 and 13.
Submissions
[32] The appellant submitted that the Judge erred when he concluded that the contract was conditional when the GST refund was sought. He says that neither the issue of titles nor the settlement terms meant the contract was conditional. The appellant says, if the contracts were unconditional, then he was entitled to file the GST returns and therefore he could not have had an intention to defraud.
[33] The Crown says the Judge misunderstood the way in which they presented their case. The Crown case was that there was never a completed agreement for sale and purchase to sell the land by the vendors. They say given one of the partners of Heatherlea Farm partnership did not sign the agreement for sale and purchase then Heatherlea Farm partnership never agreed to sell the land. Secondly, the Crown say Heatherlea Farm partnership denied ever producing the tax invoice which gave rise to the GST claim by RKB Holdings. The Crown case was that the appellant knew this was not a completed contract because he knew one of the partners had not signed and the appellant either prepared himself or knew there was a false tax invoice purporting to be on behalf of Heatherlea Farms which he dishonestly used to obtain the GST refund.
Discussion
[34] No deposit was ever paid by RKB and no settlement of the transaction took place on 31 March 2000, the date of settlement of the transaction, or has since.
[35] The Judge was wrong when he concluded (at [117]) that the sale and purchase agreement was “in place”. It was not. One of the partners of Heatherlea Farms had not signed the agreement. The partner who had signed the agreement, Mr Morris, made it clear to Mr Hunt, RKB’s agent, that the agreement would not be binding until Mr Laurie, the other partner, had also signed. Mr Laurie did not sign the agreement and so there was never a completed contract. If there was no completed agreement then no tax invoice could be generated by the vendor because no taxable supply had occurred. In those circumstances, therefore, we agree with the Judge, although for different reasons, that no GST claim for a refund could properly be sought.
[36] The second ground of appeal was that there was no evidence of an intention to defraud. The Judge did not give reasons for his conclusion that the Crown had established the appellant had an intention to defraud. At [123] the Judge identified, having previously reviewed the evidence and the other elements of the crime, the only remaining issue as being whether “using the document was done with an intention to defraud”. However, the remaining paragraphs of the judgment do not deal with evidence from which an intention to defraud might be inferred.
[37] The Judge found there was no evidence to establish Mr Hawken knew Mr Laurie had refused to sign the agreement. Thus the Crown could not establish the appellant knew the GST refund was not payable. And the Judge concluded he could not be sure the appellant had forged the tax invoice from Heatherlea Farms to RKB used by RKB to support the GST refund claim.
[38] However, the Crown in submissions before us suggested that an intention to defraud on count 3 could be inferred from the following:
(1) That Heatherlea Farms did not account to IRD for any GST as vendors on the sale of any land to RKB. This the Crown says supports the proposition that no agreement for sale and purchase had ever been finalised. As far as it goes, this is an accurate statement. However, these propositions have nothing to do with Mr Hawken. The Judge on evidence he heard concluded that Mr Hawken did not know Mr Laurie had not signed the agreement for sale and purchase. There was no evidence to establish Mr Hawken knew the agreement was not complete.
(2) The Crown say that the agreements for sale and purchase were not valid agreements. Again, as far as it goes that is accurate. However, for reasons given in (1) above this says nothing about Mr Hawken’s intent.
(3) The Crown say the tax invoice purportedly issued by Heatherlea Farms to RKB for the sale of the land was not genuine. The evidence seems to have established this proposition and it seems to have been accepted by the Judge. However, the Judge found that there was insufficient evidence to establish that Mr Hawken either forged the tax invoice himself or was knowingly involved in the presentation of a forged tax invoice. That evidence, therefore, could not be used by the Crown, given the Judge’s finding, to infer an intention to defraud.
(4) The Crown say the fact that no deposit was paid and no settlement of transaction ever took place are facts from which an intention to defraud may be inferred. However, the non-payment of the deposit by RKB does not support any inference that the GST return completed by Mr Hawken was fraudulently made. As to the non-payment of the purchase price, payment was to have occurred on 31 March 2000, well after the time (January 1999) when the Crown alleged Mr Hawken’s intention to defraud existed. The Crown had to establish when the GST return was filed that Mr Hawken did not intend, when the settlement date arrived (31 March 2000) to settle the transaction. We are not able to draw an inference beyond reasonable doubt that Mr Hawken had formed an intent to defraud as at January 1999.
[39] We are not satisfied that the Crown did establish that the appellant had the necessary intent to defraud as at January 1999. The Judge did not give satisfactory reasons for finding an intent to defraud. The Crown’s submissions involve our overturning certain findings of fact made by the Judge, which we are not prepared to do. Because we are not satisfied on one element of this charge, we allow the appeal against the conviction on this charge.
[40] We may add that the Crown might have been able to bring an alternative charge under s 143B of the Tax Administration Act, in the same way that count 9 (relying on that section) was an alternative to count 1. Clearly, when 31 March 2000 passed without any call for settlement or attempt to settle on RDL’s part, Mr Hawken and RDL should have informed Inland Revenue of that fact, so that the refund could have been reversed. But there was no such alternative count to count 3.
Count 9
[41] As we have said, count 9 was an alternative charge to count 1. The Judge found the appellant not guilty on count 1 and so went on to consider count 9. The indictment for count 9 alleged as follows:
- THE said Crown Solicitor further charges that WILLIAM HENRY HAWKEN together with RARERE DEVELOPMENTS LIMITED between 1 February 2000 and 31 March 2000, at Auckland, knowingly did not provide information to the Commissioner of Inland Revenue when required to do so by a tax law, namely a Goods and Services Tax return in the name of RARERE DEVELOPMENTS LIMITED for the period between 1 February 2000 to 28 February 2000 recording the amount of excess referred to in section 25(3)(a) Goods and Services Tax Act 1985 deemed to be a tax charged in relation to a taxable supply arising out of the cancellation of the agreement for sale and purchase of the property at Russell Road, Orongo Bay, Russell, Northland which had earlier been the subject of a claim for an input tax credit in the December 1998 Goods and Services Tax return for RARERE DEVELOPMENTS LIMITED, intending to evade the assessment of tax for RARERE DEVELOPMENTS LIMITED under a tax law.
[42] This charge relates to the purchase of a property, by an agreement dated 18 December 1998, at Orongo Bay in Northland for $330,000. RDL was the purchaser. Mr Hawken sought and obtained a GST refund from IRD for the purchase in January/February 1999. The sale was cancelled by the vendors on 17 February 2000. No GST return was ever filed by RDL covering the period February 2000. RDL, which was at that time registered for GST on an invoice basis, was required to file monthly returns. The Crown case was that Mr Hawken held himself out as a director of RDL and at the relevant time held a power of a attorney on behalf of R L Brailsford, the only person identified in the company’s returns as a director. Accordingly, the Crown said Mr Hawken, who knew the agreement had been cancelled, had an obligation, which he did not fulfil, to file the GST return which informed IRD of the cancellation of the sale and which reversed the GST refund (see s25(3)(a) Goods and Services Tax Act).
[43] When interviewed on 29 February 2000 by IRD Mr Hawken said RDL did not accept the contract was at an end. In January 2001 when again interviewed by IRD Mr Hawken said he was not instructed to enter a cancellation notice on a GST return for RDL.
[44] The Judge concluded that RDL and the appellant had responsibility to file the GST return for the company from 1 February to 28 February 2000 and had deliberately not filed the return to avoid having to account for the cancellation of the Orongo purchase and reimbursement of the GST refund by RDL to IRD.
[45] The sole ground of appeal pursued by the appellant before us was that the Crown did not establish that between 1 February 2000 and 31 March 2000 Mr Hawken was a director of RDL and therefore had an obligation to advise IRD of the cancellation of the sale.
[46] This ground was not pursued with any great enthusiasm by Ms Kennedy, for the appellant, especially after Mr Ruffin, for the Crown, had demonstrated that there was ample evidence from which the Judge could conclude that Mr Hawken was a director of RDL at the relevant period. Indeed, in reply, Ms Kennedy accepted that this ground of appeal “had collapsed”. Since, however, the appeal on this point was not formally abandoned, we need to deal with it.
[47] The appellant was at the very least an agent of the of the company. As the Judge pointed out in his decision:
[43] However, on 9 February 1999 the accused represented himself as a Director to the ASB Bank in the form: Authority To Operate the RDL account: RDL E24.
[44] The accused also provided to the ASB Bank, Form 10, being Companies Office Consent and Certificate of Director. It was dated 25/11/1998. Exhibit RDL E25. In it, the accused consents to act as a director.
[45] In the Register of Directors the accused is shown as a Director, having been appointed on 25 November 1998. R L Brailsford is also shown as Director: Exhibit RDL E26.
[46] In RDL’s Annual Return dated 7 July 1999 and filed at the Companies Office, the accused represents himself as one of the officers of RDL. The other officer is R L Brailsford. Only the accused has signed the Annual Return as Director/Authorised person. Exhibit WHH E199/4 & 8.
[48] This evidence clearly established, based on the appellant’s own assertions, that he was acting on behalf of the company and that he was at least an agent of the company. R L Brailsford was the only officer of the company. Mr Hawken held a power of attorney from her. Mr Hawken asserted that he was, and acted as if he was an officer of the company. He filed the GST returns on behalf of RDL. The Judge rejected the appellant’s explanation for his failure to file the return. In the absence of any credible explanation for the failure to file the GST return the Judge was entitled to infer the omission was done to evade a tax assessment. We therefore agree with the Judge’s conclusion. This appeal is dismissed.
Additional comments
[49] At the beginning of his judgment Judge Singh said:
[1] I preface my verdicts by indicating that I give brief reasons only for my verdicts in accordance with the principles of R v Connell [1985] 2 NZLR 233, as in that case at p 237 Cooke J said:
Further, what the Judge sitting alone delivers is intended to be a verdict. It need not be supported by elaborate reasons. To require the Judge to set out in writing all the matters that he has taken into account and to deal with every factual argument would be to prolong and complicate the criminal process to a degree which Parliament cannot have contemplated. There are cases where a point or argument is of such importance that a Judge's failure to deal expressly with it in his reasons will lead this Court to hold that there has been a miscarriage of justice. A demonstrably faulty chain of reasoning may be put in the same category. But it is important that the decision to convict or acquit should be made without much delay. Careful consideration is an elementary need, but not long exposition.
[50] It is clear that the qualification to Connell made by this court in R v Eide (decided on 8 September 2004 and now reported in [2004] NZCA 215; 21 CRNZ 212 and [2005] 2 NZLR 504) was not brought to His Honour’s attention. In Eide we said:
[21] The problems with short–form judgments are particularly acute in fraud prosecutions. The parties (that is, the prosecutor and accused) are obviously entitled to know the key elements of the Judge’s reasoning. In a case of any complexity, this will not be possible unless the Judge provides an adequate survey of the facts. As well, in this context a Judge is addressing an audience which is wider than the prosecutor and accused. If the verdict is guilty, the Judge should explain clearly the features of the particular scheme which he or she finds to be dishonest. There is a legitimate public interest in having the details of such a scheme laid out in comprehensible form. Similar considerations apply if the verdict is not guilty. Further, some regard should be had to how the case will be addressed on appeal. A judgment which is so concise that some of the key facts in the case are required to be reconstructed by this Court on appeal is too concise. We will indicate shortly a particular aspect of the present case that illustrates the problem. All of this points to the need for a judgment to be able to be read as a stand–alone document.
[51] We do not consider the Judge gave in some counts an adequate survey of the facts so that it was clear why he reached the conclusions he did. For example, in charges brought under s 229A(b) where an intention to defraud is alleged it is vital to identify (in summary form) those facts from which the Judge has inferred an intention to defraud. It is not sufficient, as the Judge did (in counts 2 and 3 for example), to simply say, “on the evidence I am satisfied beyond reasonable doubt that the accused had an intention to defraud” without identifying what evidence has led the Judge to this conclusion.
[52] The Judge’s approach to his task in this case has made consideration of this appeal significantly more difficult than it need have been.
Sentencing
[53] Given Mr Hawken’s acquittal on count 3 we need to reconsider his sentence. The appellant was sentenced to 12 months imprisonment on count 3 concurrent with identical sentences on counts 2, 6, 7, 8 and 9. By itself, therefore, quashing count 3 and entering the verdict of acquittal will have no effect on the appellant’s overall sentence. The question is, however, whether the sentence of 12 months imprisonment is still appropriate for the totality of offending now that the appellant has been acquitted on count 3.
[54] We are satisfied the sentence of 12 months imprisonment should remain. This was a systematic and serious fraud on the Goods and Services Tax system. The appellant appears to have unlawfully obtained either for himself or his associates approximately $100,000 from the fraud (excluding count 3). He is still to account to IRD for the GST on the transaction with respect to count 3. There seems little prospect of reparation being paid in the foreseeable future. The appellant has a previous history of serious dishonesty offending culminating in a sentence of 18 months imprisonment in 1989. The sentence of 12 months imprisonment for the proved offending remains appropriate.
Reparation
[55] The Judge when imposing the sentence of reparation said:
I make an order for reparation to the Inland Revenue Department in the sum of $120,000. Arrangements for payment is to be made with the Registrar upon your release from custody.
[56] This sentence did not comply with s 36 of the Sentencing Act which requires a Judge to determine the total amount of reparation, the date of any lump sum payment and the frequency and amounts of any payments by instalments. In addition, a reconsideration of the quantum of reparation may now be required given the acquittal on count 3. Counsel for the Crown and the appellant may be able to agree upon a suitable figure for reparation and an appropriate method of payment. Counsel are to file a joint memorandum, if they can reach agreement. If not, then counsel for the appellant is to file a memorandum on or before 18 May 2006 and the Crown must reply on or before 25 May 2006.
Return to prison
[57] The appellant has been on bail awaiting the result of this appeal. Unless the New Zealand Parole Board has directed the appellant may serve his sentence on home detention, he must now report to the Auckland Central Police Station between noon and 3.00 p.m. on 6 May 2006 to recommence his sentence of imprisonment.
Solicitors:
Crown Law Office, Wellington
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URL: http://www.nzlii.org/nz/cases/NZCA/2006/79.html