The Queen v Koornneef [2009] NZCA 402; (2009) 24 NZTC 23,793 (14 September 2009)

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The Queen v Koornneef [2009] NZCA 402 (14 September 2009); (2009) 24 NZTC 23,793

Last Updated: 9 January 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA435/2009

[2009] NZCA 402

THE QUEEN

v

GARY ADRIAN KOORNNEEF

Hearing: 2 September 2009

Court: Glazebrook, Gendall and Asher JJ

Counsel: D D Vincent and J W Cameron for Appellant
B D Tantrum for Crown

Judgment: 14 September 2009 at 3.00 pm

JUDGMENT OF THE COURT

A Appeal against conviction is dismissed.

2. Reparation order remitted to the District Court for review and reconsideration.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gendall J)

[1] The appellant was convicted after a jury trial in the District Court at Wellington on four counts of knowingly providing false or misleading GST returns, and four counts of knowingly not providing GST returns in breach of s 148(1) of the Tax Administration Act 1994 between September 2002 and November 2005. He made returns on behalf of a property development company, Advantage Construction and Consultancy Limited (“the company”), of which he was the sole director and his interests were the shareholders. The company had acquired properties in respect of which it claimed and received GST input tax refunds from the Department of Inland Revenue (“the Department”). The Crown case was that, when developed properties were sold, the company, through the agency of the appellant, made false GST returns, or failed to make returns so that a total sum of $2,101,500 of GST output tax payable to the Department was evaded.
[2] The grounds upon which this appeal is based is that trial counsel, Mr J A Tannahill:

• (a) failed to call as defence witnesses two persons, the appellant’s solicitor (Mr Hoggard) and accountant (Mr Turner) whom the appellant had instructed him to call as defence witnesses; and alternatively
• (b) made serious errors in advising the appellant not to call those witnesses and electing as counsel not to call them.

so that a miscarriage of justice arose through the appellant being convicted on all counts.

[3] The appeal against sentence relates solely to the order that the appellant pay reparation in the sum of $233,500.01, directed to be paid in instalments to be arranged by the Department of Collections.

Background

[4] The appellant was, in essence, sole shareholder and director of a number of interlocking companies involved with the company. The company was in the business of acquiring realty, developing townhouses and other dwellings on the land, and then selling those properties, hopefully at a profit.
[5] The company obtained refunds through GST input tax upon its purchases, and no doubt also upon the expenditure involved in developing the properties. However, when it came to the developed properties being sold, on eight individual occasions between 30 September 2002 and 30 September 2005, the appellant either filed no GST returns or filed false or misleading GST returns, in all instances doing so knowingly intending to evade the assessment or payment of the GST.
[6] The defence at trial was that the appellant did not knowingly file false or misleading returns and on one instance, in September 2005, filed a nil return on the advice of Mr Turner. His position was that in all instances he did not knowingly fail to disclose sales of properties to the Department. Sale proceeds of developed sections went to Mr Hoggard and, in some instances, to Mr Turner. The appellant’s position was that he was not always aware of the sales that had transpired and he gave evidence to that effect. He asserted that Mr Turner had advised him to file the nil return relating to the GST period ended 30 September 2005.
[7] Obviously, it was an essential part of the Crown’s case that it establish that the appellant’s actions in filing misleading returns, or not filing returns at all, were knowingly undertaken by him. The appellant gave evidence to the effect that he did not knowingly intend to evade the assessment or payment of GST.
[8] In respect of one GST period (September 2005), the appellant’s evidence was to the effect that he had been advised by Mr Turner that he need only file a nil return and, based upon that advice, that is what he did. In respect of the other seven counts, his defence was that the solicitors were involved in the sale of developed sections and, especially in so far as Mr Hoggard was concerned, the proceeds obtained upon settlement were required to be paid to a finance company because of indebtedness owing by the appellant’s company and that the solicitors were required to account to the finance company for the entire proceeds of sale. The appellant also said that the reason the first four returns were not filed was because he was waiting for Mr Turner to do so.
[9] Given the guilty verdicts, it is obvious that the jury did not accept the evidence or explanations given by the appellant.

Grounds for appeal

[10] The appellant contended that he instructed his solicitor, Mr J A Tannahill, to call Mr Turner to give evidence as to the genuineness of the state of mind of the appellant, namely that he was advised to file a nil return in respect of one transaction and did not knowingly fail to do so. In addition, Mr Turner was, it is said, to give general character evidence as to the reliability and honesty of the appellant. The other witness that the appellant contends that Mr Tannahill was instructed to call was Mr Hoggard, who was to confirm that he received sale proceeds from the various sales and that he disbursed the funds directly to the finance company. That evidence would have encompassed the fact that advice as to the sales had been conveyed to the appellant in the usual way through settlement statements.

Discussion

[11] We received affidavit evidence from the appellant, his proposed witnesses and Mr Tannahill. Both the appellant and Mr Tannahill also were cross-examined before us.
[12] We accept the evidence of Mr Tannahill that he was not instructed, in the sense of his client requiring it, that the proposed witnesses must be called. Counsel made efforts to categorise the communications of the appellant to be in the form of definite firm instructions but we do not accept that that was the case. The appellant recommended to Mr Tannahill that those persons and others be called as witnesses and at least consulted or interviewed by trial counsel to see how they might assist in giving evidence. This was done by Mr Tannahill. He concluded that their evidence could not assist the appellant and indeed might have led to his case being substantially weakened.
[13] We are satisfied this was not a case of the appellant demanding that Mr Tannahill call the witnesses to give evidence. It is well known, of course, that trial counsel are required to obey the instructions of their clients. But this is not an immutable rule, because, even if it were the case, it does not necessarily follow that counsel is bound to call witnesses who, for example, cannot give relevant or admissible evidence. That was not the case here, but in any event we are satisfied that what occurred was that the appellant advised Mr Tannahill of the possibility that these two witnesses, and others, could give evidence.
[14] It is obvious that Mr Tannahill consulted with Mr Turner to ascertain what he might be able to say. Significantly, facts that were very disadvantageous to the appellant might have emerged if Mr Turner had been rigorously cross-examined. That is because Mr Turner would have said that he advised the appellant in respect of the September 2005 count in the indictment, to file a nil return. But that was because he had not been told by the appellant that there had been any sales transactions in the relevant period when, in fact, it was known to the appellant that that was the case. The opportunity for Mr Turner, if called, to be cross-examined about this may have dealt a dreadful blow to the appellant’s case and this was something very much alive in Mr Tannahill’s mind. It was probable that Mr Turner, if called to give evidence, would also have said that the appellant’s explanation that his accountant was supposed to file the earlier returns was not true.
[15] We are satisfied that Mr Tannahill advised the appellant that Mr Turner should not be called as a witness because he would not assist the defence case and that the appellant accepted that advice. The reality is that Mr Turner’s evidence would have harmed rather than help the appellant. We are further satisfied that there was no error (radical or otherwise) made by Mr Tannahill in making the decision that Mr Turner should not be called as a witness.
[16] We now turn to the proposed witness Mr Hoggard. His evidence would only have been that his firm received funds from sale proceeds, disbursed those funds to the finance company, but, more significantly, his evidence would have highlighted the fact that the appellant was told and knew of the sales that had occurred. It is obvious from the background evidence that he knew of the need to file GST returns. After all, he had obtained the benefit of output GST tax and was reasonably familiar with what was required.
[17] Mr Tannahill considered the wisdom of calling Mr Hoggard, but concluded that he would not have assisted the appellant’s case. His final decision, conveyed to the appellant, that those witnesses should not be called could not be said to have been in error. He gave that advice to the appellant and we are satisfied that the appellant accepted that advice. This is not a case where there was a firm, rigid demand that the witnesses be called and counsel had ignored the instruction of his client. But we add that, even if that had been the case, it would not necessarily follow that a miscarriage of justice occurred. If such witnesses could not give admissible, relevant, cogent or even slightly helpful evidence to the appellant so that it would not have made any difference to the outcome, then there could be no miscarriage.
[18] The conduct of Mr Tannahill was competent, reasonable and wise in all the circumstances. If Mr Turner and/or Mr Hoggard had given evidence it would have not availed the appellant. Indeed, it could have strengthened the Crown case as to the intention and knowledge of the appellant, and was very likely to have significantly damaged his case and credibility. There is no foundation for the submission that somehow a miscarriage of justice occurred through the decision and advice, accepted by the appellant, of Mr Tannahill not to call those two witnesses.

Conclusion

[19] We are satisfied that Mr Tannahill did not make any error (radical or otherwise), nor ignore the instructions of his client. His decisions were based upon a careful and rational analysis of the danger of calling those witnesses who, in the end, would not have assisted the appellant’s case. This is not a case where counsel error, however it could be framed, could possibly have led to any miscarriage of justice.
[20] The appeal against conviction is dismissed.

Sentence appeal

[21] The appeal against sentence relates solely to the question of the reparation order made by the District Court Judge. The Judge had a reparation report and ordered reparation in the sum of $233,500.01 to be paid by instalments. Neither she, nor this Court, had any cogent information about the appellant’s statement of affairs, assets and his ability to pay reparation. Of course, the appellant acknowledges his obligation to pay reparation, as he was able to ensure that his company avoided GST payments of a very significant amount. This Court cannot intervene so as to adjust the order for reparation based on the evidence that is before it and it is impossible to determine the issue of the extent of reparation, in view of the limited information before us. It is possible, however, that the reparation order is unrealistic.
[22] We note that, in terms of s 145 of the Sentencing Act 2002, the District Court Judge can review and deal with a reparation order, and revise it, if it should eventuate that an offender is unable to meet an order for reparation. There are features which suggest the appellant might be able to meet an order for reparation, especially as he or his company has obtained the benefit of the input tax. He is a director and shareholder of five other companies, which may, perhaps, provide him with the means to provide such reparation to reimburse the Department for that which he or his company unlawfully obtained. These are matters which must be determined at first instance by the District Court and the reparation order is accordingly remitted back to that Court for reconsideration.

Solicitors:
Thomas Dewar Sziranyi Letts, Lower Hutt for Appellant
Crown Law Office, Wellington