Wenzel v R [2013] NZCA 403 (29 August 2013)

Last Updated: 1 December 2013

IN THE COURT OF APPEAL OF NEW ZEALAND
CA20/2013 [2013] NZCA 403
BETWEEN	SHANE CHARLES WENZEL Appellant
AND	THE QUEEN Respondent

Hearing:	15 August 2013
Court:	Harrison, Venning and Courtney JJ
Counsel:	M B Meyrick for Appellant B D Tantrum and F M T Culliney
Judgment:	29 August 2013 at 10.30 am

JUDGMENT OF THE COURT

The appeal against conviction on all eight counts is dismissed.
____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Introduction

[1] Shane Wenzel was found guilty following a trial before Judge Winter sitting alone in the District Court on two counts of using a document with intent to defraud (counts 1 and 2) and six counts of using a document dishonestly (counts 3, 4, 5, 6, 15 and 18).^[1] He was acquitted on 12 other dishonesty counts. Mr Wenzel was convicted and sentenced to a term of three years imprisonment.^[2]
[2] The primary issues at trial were whether Mr Wenzel participated in what was undeniably a fraudulent mortgage scheme and, if so, to what extent. Nevertheless, the trial before Judge Winter lasted for the best part of six weeks. Extensive evidence, both direct and documentary, was called. However, Mr Meyrick has refined the grounds of Mr Wenzel’s appeal against conviction with commendable clarity. He relies on the generic grounds that (a) the verdicts on the first two counts particularly were unsupported by the evidence; and (b) the Crown failed to negate the reasonable possibility that on the remaining six counts Mr Wenzel acted with a claim of right.
[3] Mr Meyrick advised that Mr Wenzel’s appeal against sentence was abandoned.

Background

[4] The essential facts are not in dispute.
[5] Mr Wenzel was between 2002 and 2006 an undischarged bankrupt. He was prohibited by law from acting as a company director. He befriended Ms Robyn Case. By all accounts she was a reasonably successful business woman. She had a company called Case Boreham Associates which operated training seminars. That is how she met Mr Wenzel; he was employed by her to run these seminars.
[6] By 2004 Ms Case had formed what is called the SCI group of property companies. In practice SCI and its related companies seem to have bought and sold low value residential properties. The Crown’s case was that Mr Wenzel effectively controlled and ran the SCI group. Mr Wenzel was said to be the promoter of a scheme designed to defraud financial institutions into lending funds to purchase properties.
[7] The essence of the fraudulent scheme which was known as the zero down scheme (counts 4, 5, 6, 15 and 18) was that SCI companies purchased residential properties for on-sale to apparently unrelated individuals (throughout called recruits) who had attended Mr Wenzel’s training seminars; that based on an artificial and inflated purchase price which was fixed by Mr Wenzel and communicated to the recruit, the latter applied to lending institutions for mortgage finance; that Mr Wenzel fixed the price by adding about 25 per cent to the purchase price which SCI originally paid for the property; and that by this means the parties created a 20 per cent margin to give the lending institution apparent security while enabling the recruit to borrow sufficient to place SCI in funds to settle the original agreement for sale and purchase. Financial institutions were induced by this scheme to lend funds which they would not otherwise have advanced.
[8] In most cases recruits purportedly paid a deposit, constituted by a cheque drawn on the ICU Trust account (the trust was formerly owned by the Wenzel Family Trust) but which was valueless and was never presented. In three other instances (counts 1, 2 and 3) relating to the acquisition of two adjoining properties and the refinancing of one the Crown’s case was that Mr Wenzel encouraged a purchaser to sign a knowingly false finance application.
[9] Mr Wenzel accepted that he had a high profile at SCI. But he denied his participation in the mortgage fraud. He said that his role was limited to what was called a business coach. In fact he appeared to carry out some type of motivational role. Mr Wenzel denied compiling the relevant documents used in the loan applications or in submitting them to lenders. He distanced himself from the recruits. He said they were independent adults who, as aspiring property developers, took their own advice and made up their own minds about applying for finance without his encouragement. In any event, he said, he believed then that the transactions were lawful.
[10] Judge Winter’s comprehensive decision traversed in detail a number of generic subjects such as common issues,^[3] the elements of the fraud charges within the context of Mr Wenzel’s role in SCI,^[4] and the elements of dishonesty by reference to certain documents and the transactions.^[5] However, it is unnecessary for us to replicate that exercise or to undertake something similar. That is because, as noted, Mr Meyrick has realistically confined the scope of Mr Wenzel’s appeal and, in particular, he accepts that Mr Wenzel’s ability to challenge the Judge’s findings of fact is limited.
[11] Against that background we will now address each of the eight counts under challenge.

Decision

Count 1

[12] Count 1 alleged that between 15 June and 10 July 2003 with intent to defraud Mr Wenzel used in support of a loan application to purchase a property at 63 Stratford Road, Alfriston Heights a document capable of being used to obtain a pecuniary advantage for the purpose of obtaining a pecuniary advantage.
[13] This charge mirrors s 229A of the Crimes Act 1961 prior to its repeal as from 1 October 2003.^[6] It is common ground that its essential elements, and those which the Crown was required to prove, were that Mr Wenzel (a) used a document; (b) with intent to defraud; and (c) intending to obtain a pecuniary advantage for himself or others. The factual focus of this charge, and all succeeding charges, was on the first element of use of a document.
[14] The relevant facts are these:

• (a) On 21 May 2003 SCI or nominee signed an agreement to purchase the property at 63 Stratford Road for $235,000. Settlement was due on 20 June 2003. SCI did not pay a deposit.
• (b) SCI apparently nominated an entity called Chez & Co Ltd as purchaser. Its shareholders were Ms Case and Ms Cheryl Weir who worked for Case Boreham & Associates. On 16 June 2003 Mr Wenzel signed a SCI Finance form, described as an employment verification, recording Ms Weir’s current base income at $60,000. He signed a similar document on 20 June 2003.
• (c) On 17 June 2003 Ms Weir signed a loan application form with SCI Finance. Her salary was stated to be $60,000 per annum. Security was offered over a property apparently owned by Ms Weir in Milford and over 63 Stratford Road. Its estimated value was $235,000.
• (d) The loan application form including the letter signed by Mr Wenzel was submitted to BNZ. On 19 June 2003 the bank advised SCI that it had approved Ms Weir’s request for finance in “principal” [sic] but subject to certain conditions including confirmation of Ms Weir’s income of no less than $60,000 per annum.
• (e) On 20 June 2003 Mr Wenzel signed another income verification of Ms Weir’s current base income of $60,000 from permanent full-time employment.
• (f) On 2 July 2003 BNZ advised Chez & Co of its approval of Ms Weir’s application for finance.

[15] Judge Winter made these findings:^[7]

• (a) Ms Weir’s representation to BNZ of an annual income of $60,000 was false. Among other things, she admitted at trial that she was earning at most $500 per week or about $26,000 per annum.
• (b) Despite her misgivings about submitting a false application form with inaccurate information, Ms Weir had obtained an assurance from Mr Wenzel that it was in order to sign the document even though it contained this false information.
• (c) The BNZ had relied upon the letter signed by Mr Wenzel confirming Ms Weir’s base income of $60,000 per annum when deciding to approve her loan application.
• (d) Mr Wenzel as Ms Weir’s “experienced coach, businessman and property developer” knew that honesty was required in loan applications about an applicant’s income and that, by virtue of his dominant role in SCI and his close association with Ms Case, he knew that the document he signed was untruthful.
• (e) Accordingly, Mr Wenzel encouraged Ms Weir’s lie and participated in her dishonest use of the letter to obtain a loan. He was thus guilty as a party to this offence.

[16] Originally Mr Meyrick challenged this verdict on the alternative grounds that the Judge either had failed to negate Mr Wenzel’s claim of right or had made findings of facts not supported by the evidence. In argument Mr Meyrick accepted that s 229A in its then terms did not require the Crown to negate a claim of right; it was only required to prove an intent to defraud – that is, an intent to deprive someone dishonestly of something which her or she owns. Applying that requirement to this case, the prosecution had to prove that Mr Wenzel intended to dishonestly deprive the BNZ of money.
[17] In recognition that the Crown was not required to negate Mr Wenzel’s claim of right on count 1, Mr Meyrick restricted his argument to the ground that the Judge’s findings of fact were unsupported by the evidence. He submitted that the letter signed by Mr Wenzel was not false. While accepting that the letter indicates Ms Weir received a salary of $60,000, Mr Meyrick submitted that in fact she earned considerably more. In particular, she enjoyed annual rental income of about $37,000. Mr Meyrick submitted the letter did not make a false representation when assessed by reference to the particularised allegation within count 1 of a document which stated a “current base income” of $60,000.
[18] At trial Mr Meyrick cross-examined Ms Weir carefully on this issue. He broke the $37,000 down into two components – first, $18,240 received from home stay students at Ms Weir’s property in Milford, and second, $18,720 from rental income for 63 Stratford Road. Ms Weir was adamant that her income was incorrectly recorded at $60,000. She then agreed with Mr Meyrick’s proposition that: “[It is] legitimate to include anticipated income from the purchased property [63 Stratford Road] as income.”
[19] Mr Meyrick made that same point in cross-examination at trial on three successive occasions without intervention from the Judge or objection from the prosecutor. However, this line of questioning was plainly objectionable. It was not within Ms Weir’s competence to answer whether the proposition was legitimate. While the Judge did not address this particular submission in his decision, it would have been factually misleading to include anticipated or contingent earnings from rental in a document described as an “employment verification” of “current base income”. Ms Weir’s then current income from employment was not $60,000, as she admitted; it was about $26,000. In stating to the contrary, the letter was plainly false.
[20] We are satisfied from the transcript supported by the documents that the Judge had a proper evidential basis for his finding. In a case of this nature, findings of credibility fell squarely within the Judge’s domain. On that basis, and given that the Judge’s related findings are not and cannot be challenged, Mr Wenzel’s appeal on count 1 must fail.

Count 2

[21] Count 2 alleged that between 12 August 2003 and 1 October 2003 with an intent to defraud Mr Wenzel used in support of a loan application to purchase a property at 63B Stratford Road a document capable of being used to obtain a pecuniary advantage for the purpose of obtaining a pecuniary advantage. This charge was also laid under s 229A.
[22] In summary, Ms Weir agreed to buy from SCI a property at 63B Stratford Road, adjoining the property at 63 Stratford Road which was the subject of count 1, for $255,000. The sale was by private treaty without a real estate agent’s participation. The agreement was signed on 13 August 2003 with possession and settlement due on 31 August 2003.
[23] On 1 October 2003 Ms Weir signed a loan application with Pioneer Mortgage Services Ltd. In it she repeated the falsity which is the subject of count 1. She listed her “annual gross income” as $60,000 to $70,000.
[24] The Judge made these findings:^[8]

• (a) Ms Weir’s representation about her income (the Judge described it as about salary) was wrong. She was earning about $500 per week.
• (b) Ms Weir discussed with Mr Wenzel the fact that the figure was wrong but he advised her “... that the income needs to be raised to actually, for the application to get through [sic]”. Ms Weir described this process of including inaccurate income figures in loan applications as “twinking”.
• (c) While Ms Weir might not have completed the form, she signed the application and adopted its representations about her income as accurate when the application was lodged.
• (d) Based on the same reasoning as for count 1, the Judge found that Mr Wenzel encouraged Ms Weir’s lie and was guilty as a party to this offence.

[25] Mr Meyrick’s original challenge to this conviction was based on the two alternative grounds advanced on count 1. However, for the same reason he accepted that his argument must be limited to a proposition that the Judge erred by making findings of fact which were unsupported by the evidence. He conceded that a claim of right argument was unavailable in law.
[26] Mr Meyrick said that the Judge was wrong to treat Ms Weir’s representation as being about salary when in fact the application referred to “annual gross income”. However, the application form listed a series of questions about the applicant’s occupation, employer, date of commencement of employment, previous employment and then asked about “annual gross income”. In that context the questions and answers were plainly limited to Ms Weir’s employment details and salary. Pioneer was seeking accurate information about her employment income. Also, as Mr Tantrum pointed out, the form provided separately for “rental or other income” which Ms Weir stated was $400 per week.
[27] In any event, as we have already found, it would be inaccurate and thus false to calculate Ms Weir’s annual income as at 1 October 2003 by reference to contingent and thus unearned rental.
[28] It follows, for the reasons applying to count 1, that Mr Wenzel’s appeal against the Judge’s verdict on count 2 must fail.

Count 3

[29] Count 3 alleged that between 31 September 2003 and 1 November 2003 with intent to obtain property or a pecuniary advantage Mr Wenzel dishonestly and without claim of right used a document in support of a loan application to purchase the property at 63B Stratford Road.
[30] This charge was laid under s 228(b) to reflect the law change effective from 1 October 2003. In essence, the amendment introduced by s 228(b) required the prosecution to prove the new composite element of acting dishonestly and without claim of right instead of with intent to defraud.
[31] As Mr Tantrum explained, count 3 was laid separately from count 2 to reflect the allegedly fraudulent transaction straddling the date of repeal of s 229A and introduction of s 228(b). Count 3 was effectively a continuation of the facts giving rise to count 2 while recognising that Ms Weir’s loan application to Pioneer incorporated a request for funds to refinance the property at 63 Stratford Road. The total sought was $410,000. Pioneer approved the loan on 13 October 2003.
[32] The Crown relied upon the same factual misrepresentation by Ms Weir which formed the basis for count 2. Mr Meyrick repeated his submission that the Judge’s finding that Mr Wenzel was guilty as a party on count 3 was unsupported by the evidence. However, we reject it for the reasons given in dismissing the appeal against count 2.
[33] However, given the statutory change on 1 October 2003, Mr Meyrick has a proper legal foundation for pursuing an alternative submission that the Crown has failed to prove that Mr Wenzel acted without claim of right. A claim of right is defined by s 2(1) of the Crimes Act as:

... in relation to any act, means a belief that the act is lawful, although that belief may be based on ignorance or mistake of fact or any other matter of law other than the enactment against which the offence is alleged to have been committed.

[34] The fatal obstacle to Mr Meyrick’s argument is that a claim of right defence did not apparently feature at trial. Mr Wenzel’s primary line of defence was that he did not participate in the actus reus of the crime – that is, signing and submitting a materially false loan application. His defence was not to the effect that at the relevant time he held a belief that the act was lawful. Accordingly, there was no available credible factual narrative upon which the Judge might find that Mr Wenzel possibly held such a belief.
[35] In its absence, the only inference available from the factual findings which are not the subject of challenge or which we have upheld is that when participating in the falsity by encouraging Ms Weir to perpetrate it Mr Wenzel could not possibly have had a belief that such an act was lawful.
[36] Accordingly Mr Wenzel’s challenge to the verdict on count 3 must fail.

Count 4

[37] Count 4 alleged that between 17 December 2003 and 25 February 2004 with an intent to obtain any property or pecuniary advantage dishonestly and without claim of right Mr Wenzel used a document in support of a loan application to purchase properties at 7 Astor Place, Manurewa and 20 Landette Road, Manurewa.
[38] This charge and the remaining charges were also laid under s 228(b). In summary, SCI agreed to sell both properties – 7 Astor Place and 20 Landette Road – to Matt and Gina Palmer for $170,625 and $275,000 respectively. Both agreements were signed on 18 December 2003 and purported to be entered into through the agency of Harcourts Realty which the Judge found was false.
[39] This was the first of the zero down deposit charges. The Crown alleged that the particular documentary falsity was conveyed by Edward D , the Palmers’ solicitor, in two letters to Westpac dated 27 January 2004 in support of applications for loan finance. Each letter recited a confirmation “... that my clients had paid the deposit [of $34,125 and $55,000 respectively] as shown in the agreement”. The loan applications made the same statements. Both were untrue.
[40] The Judge found that the SCI mortgage fraud scheme was frequently executed by means of documentary misstatements about the purchaser’s payment of a deposit. He summarised the circumstances in this way:

[62] Very often the purchaser in these transactions did not have enough savings or did not want to pay the vendor a cash deposit. Many of the subject transactions were concluded on a zero down deposit basis. This was often effected by the SCI purchaser or the ICU trust providing the purchasers solicitor with a cheque and instructions not to cash it but hold it as a deposit with directions to so strictly advise the vendor. Yet many of the supporting agreements for the loan applications referred to this payment of a deposit as an asset when they were clearly valueless.

[63] Mr D never disclosed in his letters that he had received instructions not to cash deposit cheques sent to him by the SCI purchaser or the ICU trust on the SCI purchasers behalf. The forensic accountant Ms Peden was of the opinion that the transactions were done in that way in order to give the appearance of a deposit being paid when there was not one. The Crown submits that this deceptively induced or caused the lenders to execute loan agreements and mortgage documents and advance funds to the purchasers. These letters are in part the basis for Counts 4, 5, 6, 7, 8, 10, 12, 13, 14, 15, 16, 17, 18 and 19.

[64] Mr D ’s evidence was that had he known that the cheques were valueless he would have advised Wadsworth Ray, the vendor’s solicitor. Given Mr D ’s probity as an experienced and senior conveyancing solicitor, it is likely that he would also have advised his bank client as well if he knew of this zero down arrangement. I find Mr D simply and completely carried out his clients’ instructions, as he was bound to do.

[65] I accept the evidence of Ms Peden that she examined the solicitor’s trust account records in relation to the payment of deposits and could find no examples of deposits actually being received. I find the deposit cheques sent

to Mr D were not presented and never cashed. Rather they were held by him as a pledge to ensure the contract was completed.

(Footnotes omitted.)

[41] The Judge made these factual findings:^[9]

• (a) On Ms Palmer’s evidence, all aspects of the purchase and financing activity were arranged by Mr Wenzel. He went so far as to instruct her to go to the Warehouse to acquire a book of payslips to “assist” her loan application.
• (b) As a result, Mr Wenzel’s participation was not limited to that of “coach” but extended to arrangement of the loan applications.
• (c) Mr Wenzel met with Mr D and persuaded him to send to a nominated person in Westpac a letter confirming payment of the Palmers’ deposit. Given that Mr Wenzel was effectively SCI’s alter ego and the Palmers’ very active coach, he must have known whether the deposits had been actually paid.
• (d) Both letters made an affirmative assertion that the deposits had been paid, repeated in the loan application, when in fact the deposits were not paid.
• (e) A letter falsely written on the letterhead of an entity called “Kiwi Cutz”, Ms Palmer’s business, falsely claimed her income exceeded $75,000.

[42] The Judge concluded:

[94] I find Mr Wenzel was an experienced coach, businessman and property developer very familiar with the need for honesty in loan applications. I am sure his dominant role in SCI and his close association with Ms Case and his control and arrangement of this particular transaction would lead him to know the truth of Ms Palmer’s income and the truth about her payment of deposits. I find he encouraged Ms Palmer’s lie in the loan application about her income. I find he used Ms Palmer and Mr D as innocent agents to complete his dishonest use of the Agreements for sale and purchase and the lawyer’s letter asserting the deposits had been paid in support of Ms Palmer’s loan application knowing the deposits had not been paid.

[43] It is most significant that Mr Wenzel’s defence was, as we have noted already, one of denial of participation in the transaction, not of a mistaken belief that the impugned statements were correct. In these circumstances we are satisfied that the Judge’s finding of dishonesty by Mr Wenzel, both as a principal and secondary party, arising from his knowledge of the falsity of Mr D ’s representations, is by inference a finding that he acted without claim of right; no other conclusion could logically be drawn. In this context, the concepts of dishonesty and absence of a claim of right are two sides of the same coin.
[44] In any event, as Mr Tantrum pointed out, the Judge made these general findings in relation to a possible claim of right defence on the false deposit charges:

[39] I find with few exceptions each of the recruits knowingly or recklessly lied and deceived in their loan application documents submitted to the mortgage lenders. Apart from the processing of deposits it is difficult to find the recruits had a relevant but mistaken belief in the lawfulness of what they were doing. I am satisfied that a broad claim for ‘innocent’ agency cannot succeed. Apart from two notable exceptions Mr Wenzel’s assessment of guilt for each charge will be as a party to the loan applicant’s dishonesty.

...

[72] I find that there is a reasonable possibility the recruits believed the zero down deposits scheme was lawful. I find there is a reasonable possibility that Mr. Wenzel believed the zero down deposits scheme and the processing of cheques through Mr D was lawful. I find with two notable exceptions the Crown have not excluded the reasonable possibility that both the recruits and Mr Wenzel had a relevant but mistaken belief in the lawfulness of what they were doing in arranging the zero down deposits in this way through Mr. D .

[73] However, whether any representation in the loan applications or accompanying documents about the payment of deposits was a dishonest act of the loan applicant, Mr Wenzel or both is a matter which requires individual findings upon each count which I now move to consider.

[45] Mr Meyrick emphasised that Mr D was originally charged as a
co-offender with Mr Wenzel but was subsequently discharged under s 347 of the Crimes Act. Mr Meyrick submitted that Mr Wenzel was entitled to place trust in and reliance on Mr D as a professional; that there was no basis for the Judge to find Mr Wenzel used Ms Palmer, and particularly, Mr D as innocent agents; and that Mr D would not have written the letters unless he was himself satisfied that the deposits were paid or Ms Palmer had instructed him to that effect. The purpose of this submission was to show that there was a reasonable possibility Mr Wenzel might have acted on a claim of right, given Mr D ’s participation and apparent endorsement of the statement that the deposits were actually paid.
[46] We are not satisfied that Mr D ’s performance of his duties as the Palmers’ solicitor can be called in aid to assist Mr Wenzel. His exposure to criminal liability arose independently of Mr D ’s conduct. However, given that Mr D wrote similar letters for a number of other recruits whom he represented on property purchases from SCI, we are satisfied that the Judge’s assessment of Mr D ’s state of knowledge and independent culpability was most charitable.
[47] As the Judge noted, Mr D himself entertained doubts about the authenticity of his own letters but he chose to rely on Mr Wenzel. It may thus seem surprising that once he was on suspicion Mr D elected to follow the path of reliance on the word of a third party instead of asking his clients directly for confirmation of payment of the deposit with supporting evidence. He is open to the obvious criticism of turning a blind eye. And the Judge’s exoneration of Mr D on the basis that he would have advised the vendor’s solicitor if he had known the deposit cheques were valueless is irrelevant to the real point that Mr D was representing that deposits had been paid when he had received instructions not to present cheques. But, whatever was his part in the fraud, Mr D ’s conduct does not excuse Mr Wenzel.
[48] Mr Wenzel’s appeal against the Judge’s verdict on count 4 must fail.

Count 5

[49] Count 5 alleged that between 20 October 2003 and 3 March 2004 with intent to obtain any property or pecuniary advantage Mr Wenzel dishonestly and without claim of right used a document to support a loan application to purchase a property at 112 Gray Avenue, Papatoetoe.
[50] In brief summary, a company called Rongotai Holdings Ltd, part of the SCI group, signed an agreement on 21 October 2003 to sell a residential property at 112 Gray Avenue, Papatoetoe to Brian Samson and Michelle Thompson for $250,000. The agreement represented that a deposit of $50,000 had been paid. On 15 January 2004 Mr Samson and Ms Thompson signed a loan application to Westpac seeking finance of $200,000 to complete the transaction. In it they stated in two separate places that they had paid a deposit of $50,000.
[51] Mr D again represented the purchasers on this transaction. On 27 January 2004 he wrote to Westpac confirming that “... my clients have paid the deposit of $50,000 as shown on the agreement”. Westpac approved the loan. Mr Samson and Ms Thompson later executed a mortgage in Westpac’s favour which was witnessed by Mr Wenzel.
[52] The Judge accepted that there was little evidence to support Mr Wenzel’s direct involvement in the loan application. However, he was satisfied that Mr Wenzel was guilty as a party on the grounds that:^[10]

• (a) Mr Wenzel introduced Ms Thompson, whom the Judge found was naive, to the transaction and encouraged her loan application.
• (b) Ms Thompson, on her admission, did not pay a deposit of $50,000. She signed a cheque for that amount when she did not have funds. But she signed on an assurance from somebody (she could not remember who) that the cheque would not be presented.

[53] While the Judge did not refer to it in his decision, Ms Thompson gave evidence of her frequent contact with Mr Wenzel before and after purchasing the property and applying for finance. Plainly he acted as her financial adviser, especially when she sought assistance after later falling into default under the Westpac mortgage. As a result the bank exercised its powers of sale.
[54] The Judge found Mr Wenzel guilty as a party to count 5 on this ground:

[99] There is little evidence to support Mr Wenzel’s direct involvement in the loan application. However, I find through his dominant role in SCI he encouraged the applicant’s deceptions in the loan application that she had paid a $50,000 deposit and this was an asset. As well I find he encouraged her deception that a deposit on the purchase was paid when she clearly knew that was not the arrangement she agreed to with the vendor. That was her dishonest use of the documents to obtain a loan. While the D letter supports that deception and adds weight to this conclusion, there is insufficient evidence to prove Mr Wenzel used Mr D on this occasion as his ‘innocent agent’. I find when encouraging the loan applicants dishonest use of these documents to obtain a loan, Mr Wenzel did so with dishonest intent.

[55] In support of his submission that the Judge failed to negate a claim of right defence on this charge, Mr Meyrick submitted that the parties never intended that the cheque signed by Ms Thompson should be banked but rather that it should be remitted by Rongotai. However, even if this was the parties’ intention, as was borne out by subsequent events, it is irrelevant to the separate question of whether the statements made in Mr Samson and Ms Thompson’s application to Westpac and in Mr D ’s letter were false.
[56] Alternatively, Mr Meyrick submitted that the Judge’s earlier findings cited above (but repeated for convenience here) could not be reconciled with the Judge’s finding that Mr Wenzel was guilty as a party:

[72] I find that there is a reasonable possibility the recruits believed the zero down deposits scheme was lawful. I find there is a reasonable possibility that Mr. Wenzel believed the zero down deposits scheme and the processing of cheques through Mr D was lawful. I find with two notable exceptions the Crown have not excluded the reasonable possibility that both the recruits and Mr Wenzel had a relevant but mistaken belief in the lawfulness of what they were doing in arranging the zero down deposits in this way through Mr. D .

[57] However, as Mr Tantrum pointed out, count 5 is one of the “two notable exceptions” along with Mr D ’s letters giving rise to count 4, expressly identified by the Judge. That was because for both counts 4 and 5 Mr D ’s letters confirmed payment of the deposits whereas in all other cases he wrote to the vendor’s solicitors to the effect that he held the cheque for a deposit. As Mr Tantrum also submitted, the inference clearly available from the basis upon which the Judge returned not guilty verdicts on other zero down deposit scheme charges is that he found the Crown had failed to exclude the possibility that Mr Wenzel and the recruits had a relevant but mistaken belief in the lawfulness of these deposits.
[58] Mr Wenzel’s appeal against his conviction on count 5 must fail.

Count 6

[59] Count 6 alleged that between 28 February 2004 and 8 April 2004 with intent to obtain any property or pecuniary advantage Mr Wenzel dishonestly and without claim of right used a document to support a loan application to purchase a property at 23 Eastburn Street, Papakura.
[60] On 9 March 2004 SCI entered into an agreement to sell the property to Simon McLachlan for $206,600. The agreement recited a payment of a deposit of $41,320. SCI had in fact purchased this property the same day for $160,000. Settlement of both transactions was scheduled for 8 April 2004.
[61] The Crown alleged that these four documents were used dishonestly in this transaction:

• (a) a statement in Mr McLachlan’s loan application to Westpac dated 16 March 2004 that he had paid a deposit of $41,320;
• (b) a letter submitted in support from CulleNZ Ltd stating that Mr McLachlan was employed as a driver/labourer earning $45,000 per annum;
• (c) the loan application to Westpac, listing the deposit as an asset and representing that it had been paid; and
• (d) a letter from Mr D to SCI’s solicitor confirming that he held a cheque for the deposit amount.

[62] The Judge found this charge proven on the grounds that:^[11]

• (a) Mr McLachlan, who is not called as a witness, had signed a deposit cheque but this was never presented or banked.
• (b) CulleNZ’s letter was false, as its author, Ms Cullen, confirmed. In evidence, which the Judge accepted, Ms Cullen said that she provided the document at Mr Wenzel’s request and that she was later asked by another SCI operator, Richard Justice, to “twink” the detail in the letter.
• (c) The statement in Mr D ’s letter about “holding a cheque” contradicted the statement made in the loan application that the deposit had been paid and amounted to an asset.
• (d) Mr Wenzel, Ms Cullen (the letter’s author) and Mr Justice knew that the application must be made honestly.
• (e) Mr Wenzel, acting as SCI’s representative, actually submitted the loan application to Westpac through his contact, a Mr Mohammed, knowing that the deposit cheque was to be held and not paid as described in the listed assets.
• (f) By virtue of his request to the letter’s author, and his submission of the application form to Westpac, Mr Wenzel was guilty as party to this offence.

[63] Mr Meyrick challenged this verdict on two fronts. First, he referred to evidence given at trial that Mr McLachlan, who worked casually for CulleNZ, was not paid in cash but in kind. He referred to the absence of evidence about the value of this “payment in kind”. In his submission it must have had some value, given the legislative recognition of such payments through the imposition of a fringe benefit taxation system.
[64] This submission is optimistic and untenable. The material statement was that Mr McLachlan was employed as a driver for CulleNZ on a salary of $55,000 per annum. Ms Cullen admitted that the statement was false. Mr McLachlan did not earn that salary. In fact, he earned nothing. He was simply granted some alternative benefits such as free lodging. Whatever the value of those benefits, and it was unlikely to be substantial, it did not amount to receipt of a salary.
[65] Second, Mr Meyrick focused on the roles played in the transaction by Messrs Justice and Mohammed. He referred to an email sent by Mr Justice to Ms Cullen, asking her to amend the employment letter in two material respects. In particular the email noted Mr Mohammed’s role. He is said to have suggested the changes.
[66] Based on this document and on answers given by Mr Mohammed in
cross-examination at trial, Mr Meyrick developed a submission that Mr Mohammed knew or must have known that CulleNZ’s letter was not genuine. In fact, he said, Mr Mohammed knew the letter was false. That submission gave rise to a further proposition that Westpac, through Mr Mohammed, knew of the falsity. As a result the bank was not deceived by the document.
[67] Mr Tantrum answered this submission by reference to evidence which might exculpate Mr Mohammed and engaged in the merits. But the answer to Mr Meyrick’s submission is more elementary. Mr Wenzel was charged with using a document – namely the letter – to support a loan application with intent to obtain a dishonest pecuniary advantage. The inquiry must thus focus on whether Mr Wenzel used a document, not whether others participated or the bank was deceived. They are not elements of the charge.
[68] Mr Meyrick did not challenge the Judge’s factual findings in that respect. His acceptance of Ms Cullen’s evidence excluded that avenue of challenge. Accordingly, Mr Wenzel’s appeal against the Judge’s verdict on count 6 must fail.

Count 15

[69] Count 15 alleged that between 1 August 2004 and 21 August 2004 at Manukau with an intent to obtain any property or pecuniary advantage Mr Wenzel dishonestly and without claim of right used a document to support a loan application to purchase a property at 54 Arimu Road.
[70] With a degree of hyperbole, Mr Tantrum described this as the most compelling illustration of Mr Wenzel’s cynical abuse of the trust of a naive person. The facts were certainly unusual.
[71] Ms Marina Tu’inukuafe had just resigned as a nun. She signed an agreement to buy 54 Arimu Road from unrelated parties for $262,500. The agreement recites payment of a deposit of $52,500. The transaction was through the agency of One Tree Hill Realty.
[72] On 2 August 2004 Ms Tu’inukuafe signed a loan application form with Westpac. The cost of the project was stated to be $263,500. Her “contribution” was listed at $53,500. The loan sought was $210,000. Elsewhere, under the heading “Financial assets”, the form stated “deposit paid to solicitor” as $52,500.
[73] In addition, Mr D provided what was by then a standard form statement in a letter dated 2 August 2004 to SCI’s solicitor that he was holding a cheque for $52,500 being the deposit.
[74] The Judge found that Ms Tu’inukuafe was both naive and poor. He was satisfied on her evidence that the Westpac application and other documents were completed at Mr Wenzel’s request and direction. The form was completed when she signed it. She could not remember whether Mr Wenzel explained what she was signing. However, as the Judge accepted, she said: “The only thing he told me that he gonna fix everything for me.”
[75] In addition, apart from accepting Ms Tu’inukuafe’s evidence the Judge found that:^[12]

• (a) Mr Wenzel signed the cheque submitted to Mr D as representing payment of the deposit;
• (b) the agreement for sale and purchase form was false (that is, it was not negotiated through One Tree Hill’s agency);
• (c) Westpac relied on Mr D ’s letter and the loan application, including a false statement of assets of Ms Tu’inukuafe’s;
• (d) Mr Wenzel knowingly used the false sale and purchase agreement to bolster Ms Tu’inukuafe’s loan application by giving the appearance that the transaction was at arm’s length, of sound market value and thus offered good security for the loan; and
• (e) through the innocent agency of Mr D and Ms Tu’inukuafe, Mr Wenzel used the relevant documents dishonestly and without justification. Mr Wenzel was thus guilty as a principal.

[76] Mr Meyrick challenged this verdict on two grounds. First, he challenged the Judge’s findings that Ms Tu’inukuafe and Mr D were innocent agents. In support he says this:

Ms Tu’inukuafe had been a member of the Sisters of Mercy for 23 years and although this is not in the evidence script – the Court can accept she turned up to give her evidence dressed in a full nun’s habit including a wimple, which few nuns wear these days.

[77] Mr Meyrick submitted that this Court should be slow to accept her evidence as credible. He was not suggesting that she was dishonest or devious – rather the opposite. He says her transparent honesty made her evidence unreliable. He suggested the Judge was unduly impressed by her. In Mr Meyrick’s submission, Ms Tu’inukuafe may have lived a sheltered life but nuns are not necessarily naive. He said the Judge was wrong to accept that Mr Wenzel was trying to bully Ms Tu’inukuafe when he may as easily have been trying to assist her in preparing her documents. He referred to the fact that Mr Wenzel took Ms Tu’inukuafe to the bank twice, helped her open a bank account, took her to the lawyer, found a house for her to live in, and assisted in other ways.
[78] We cannot accept this submission. The Judge had the benefit of hearing and seeing all witnesses, both in examination in chief and under cross-examination. He was uniquely placed to evaluate Ms Tu’inukuafe’s reliability. The appellate reluctance to interfere in first instance findings, except in the case of clear and obvious error, is well settled.
[79] In any event, even if the Judge had not found that Ms Tu’inukuafe acted innocently, his findings of Mr Wenzel’s participation would have supported a verdict of guilty as a secondary party.
[80] Second, Mr Meyrick challenged the Judge’s reliance on a finding that the agreement for sale and purchase was falsely represented to be through One Tree Hill’s agency. He said that there was no evidence of Mr Wenzel’s encouragement to use the document here.
[81] There is a short answer to this submission. The Judge relied upon a number of false documents to justify his verdict. Even if the false agreement is excluded, the false statements made in the loan application form – completed and submitted by Mr Wenzel – are a sufficient factual foundation for the charge.
[82] Mr Wenzel’s appeal against the verdict on count 15 must fail.

Count 18

[83] Count 18 alleged that between 2 August 2004 and 14 September 2004 with intent to obtain any property or pecuniary advantage Mr Wenzel dishonestly and without claim of right used a document to support a loan application to purchase a property at 62 Alfriston Road, Manurewa.
[84] On 11 August 2004 Karen Gwilliam or nominee signed an agreement to purchase from SCI the property at 62 Alfriston Road, Manurewa for $495,000. This instrument was the basis for Ms Gwilliam’s successful application to Westpac for a loan of $396,000. The Crown alleged that the application was deceptive in three respects: (a) a representation that a deposit of $99,000 had been paid; (b) representations about the nature of Ms Gwilliam’s employment and her salary; and (c) the use of One Tree Hill Realty’s stamped agreement for sale and purchase.
[85] The Judge made these factual findings:^[13]

• (a) Ms Gwilliam signed the agreement as purchaser.
• (b) One Tree Hill Realty’s stamp was used on the agreement without authority.
• (c) Mr Wenzel persuaded Ms Gwilliam to purchase the property after another party had withdrawn and he told her that the purchase price would be inflated by 25 per cent above the price paid by SCI to enable Ms Gwilliam to borrow a sufficient amount, to be secured by a mortgage, which would effectively meet the purchase price.
• (d) The application form signed by Ms Gwilliam contained false statements under the heading “Financial Assets” of “Deposit to Solicitor $99,000” and also under the heading “Cost of Project” of Ms Gwilliam’s “contribution” to a sum of $495,000 as $99,000.
• (e) Mr D also supplied what the Judge described as his “usual ... letter” confirming that he held a cheque for $99,000 when that amount had not been paid.
• (f) The application also falsely stated that Ms Gwilliam was then employed as a manager by SCI on a salary of $92,000 and was supported by a letter to this effect confirming that figure and signed by Mr Wenzel. Ms Gwilliam’s income from SCI was considerably less.

[86] The Judge concluded as follows:

[172] I am sure Mrs Gwilliam lied about her income and the deposit payment and used those documents dishonestly and without justification to gain the pecuniary advantage of a bank loan. I accept her evidence over Mr Wenzel’s encouragement of those lies. I find he knew what her real income was but nonetheless inserted a false amount in her employment letter. In addition, I am satisfied that Mr Wenzel encouraged Mrs Gwilliam to claim a false deposit in her loan application. I am sure Mr Wenzel’s encouragement to use those documents in this way was dishonest and with the intent to assist Mrs Gwilliam to obtain a loan. There is no justification for this dishonest case.

[173] The Crown have not however excluded the reasonable possibility that the fake real estate agency form was used in this transaction as a matter of convenience only.

[174] I find Mr Wenzel guilty as a party on count 18.

[87] Mr Meyrick challenged this finding on two grounds. First, he submitted that the Judge failed to find that Mr Wenzel’s claim of right had been properly negated. This submission faces two fatal obstacles. One is that there was no credible factual narrative to support this ground; Mr Wenzel did not defend the charge on the basis that the act of submitting an application form containing material statements was lawful. The other is that the Judge, in the passage just cited, expressly excluded any defence of justification.
[88] Second, Mr Meyrick submitted that the Judge erred in giving undue weight to Ms Gwilliam’s evidence in some respects when he found that she lied in others. For example, the Judge rejected Ms Gwilliam’s denial that she prepared and signed the loan application. He referred also to the Judge’s finding that Ms Gwilliam lied about her income in the loan application form. However, those findings do not assist Mr Wenzel. The Judge was entitled to accept Ms Gwilliam’s evidence in some respects and reject it in others. The fact that she lied in her application form or at trial about signing the form does not disqualify her evidence from acceptance on the nature and extent of Mr Wenzel’s participation. Once the Judge made that finding, a verdict of guilty was inevitable.
[89] Mr Meyrick raised a subsidiary argument that Ms Gwilliam may not have lied when representing her salary from SCI at $92,000. He said that it is undoubtedly true that she had not been paid $92,000 by way of salary when submitting the application form. However, he submitted that it is possible Ms Gwilliam’s letter may have been referring to future or anticipated income.
[90] We reject this submission. It could not be plainer that when read as a whole the letter intended and was intended to refer to Ms Gwilliam’s existing salary.
[91] Mr Wenzel’s appeal against his conviction on count 18 must fail.

Result

[92] Mr Wenzel’s appeal against his conviction on all eight counts is dismissed.
[93] In the context of the primary ground for this Court’s previous decision to quash Mr Wenzel’s convictions on his first trial and order a retrial, it is appropriate for us to acknowledge the structure, quality and content of Judge Winter’s decision.

Solicitors:
Berman & Burton Barristers & Solicitors, Auckland for Appellant
Crown Solicitor, Auckland for Respondent

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^[1] R v Wenzel DC Manukau CRI-2006-092-14379, 15 October 2012. This was a retrial after this Court allowed Mr Wenzel’s appeal against conviction at an earlier trial: Wenzel v R [2010] NZCA 501.

^[2] R v Wenzel DC Manukau CRI-2006-092-14379, 14 December 2012.

^[3] At [10]–[16].

^[4] At [28]–[44].

^[5] At [49]–[73].

^[6] Crimes Amendment Act 2003, s 15.

^[7] At [77]–[82].

^[8] At [84]–[86].

^[9] At [87]–[92].

^[10] At [98]–[100].

^[11] At [103]–[107].

^[12] At [146]–[150].

^[13] At [165]–[171].