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Cullen v R [2014] NZCA 325; [2014] 3 NZLR 471; (2014) 27 CRNZ 118 (14 July 2014)

Last Updated: 30 January 2018

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IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN
 Appellant
AND
 Respondent
Hearing:
16 June 2014
Court:
White, Keane and MacKenzie JJ
Counsel:
S D Cassidy, P Broad and G A Harvey for Appellant K Raftery for Respondent
Judgment:


JUDGMENT OF THE COURT

The appeal is dismissed.
____________________________________________________________________

REASONS OF THE COURT

(Given by White J)

Introduction

[1] The appellant, Mr Cullen, appeals against his convictions following a second jury trial in the Manukau District Court on 15 counts of receiving stolen motor vehicles under s 246 of the Crimes Act 1961. Mr Cullen’s sentencing on these convictions is awaiting the outcome of this appeal.
[2] At his second trial Mr Cullen was charged with being a party to offending by Tamaki Metals Ltd (TML), the lessee of the scrap metal yard in South Auckland where the stolen motor vehicles were found by the police.
[3] Mr Cullen appeals against his convictions on the grounds that the District Court Judge, Judge McNaughton, was wrong to decide as a matter of law that Mr Cullen was the only “directing mind” of TML and that he consequently misdirected the jury on that issue as well as the issues of Mr Cullen’s “secondary liability” and the point in time at which “recklessness” was to be assessed under s 246 of the Crimes Act. It is contended that a miscarriage of justice arose as a result of these errors.[1]

Background

[4] There is no dispute that the evidence at the trial established that Mr Cullen was the sole director and manager of TML, which held the necessary scrap metal dealer’s licence for the operation of the yard under the Secondhand Dealers and Pawnbrokers Act 2004 (the SDP Act). He was in fact named on the licence as the only person involved in its management. The evidence also established that he was: in control of TML’s only shareholder, Tamaki Rugby League Inc; at TML’s yard almost every day running the business and the Tamaki Rugby League Academy from buildings there; in control of TML’s accounts and purchases; in charge of TML’s second hand dealer’s records and second hand licence lists, as required by s 42(1) of the SDP Act; responsible for keeping stolen cars off the yard; and referred to by employees as “boss” or “doc”.
[5] There is also no dispute that the evidence at the trial established that, in addition to Mr Cullen, there were three employees of TML, Messrs Leha, Rogers and McPherson, who were authorised by certificates issued by TML under s 19(2) of the SDP Act to purchase secondhand vehicles from members of the public and who in fact did so using TML’s funds. These employees followed “a buyer’s guide”, which Mr Cullen had prepared, dated 1 January 2009. The guide principally emphasised that the police had given an official warning that TML was not keeping adequate records of its metal purchases and emphasised the proper customer identification steps that should be followed and that if buyers thought a vehicle was stolen, they should not buy it, and should make a report to the police.
[6] The process of TML’s operation was that any vehicles purchased by TML were delivered to the yard by the vendor, where they were typically purchased by Messrs Leha, Rogers and McPherson with ready cash, while Mr Cullen was in his office; moved around the yard by forklift; put up on a stand; drained of fluids; taken inside for further dismantling; taken back outside; and crushed and sold for scrap metal.
[7] The evidence also established that Mr Cullen oversaw the work of the three employees by writing their short term or daily tasks on a whiteboard located in the yard lunchroom, by giving them instructions and by checking regularly on the work they did.
[8] Mr Cullen himself worked in an office at the yard with his accounting assistant, Ms Wilcox. She was sent about once a fortnight to the post office to check whether cars were stolen and sent immediately if there was any particular suspicion.
[9] There is now no dispute that the 15 motor vehicles the subject of Mr Cullen’s 15 convictions were stolen motor vehicles. A number of the vehicles were brought to the yard by men identified as Sean Johnson and Jared Bunce.
[10] Mr Cullen admitted filling in the dealer records for the motor vehicles the subject of counts 1, 2, 4, 5, 6, 7, 8 and 10.
[11] Most of the records were not signed on behalf of TML. Many were not dated. The vehicle descriptions were minimal – sometimes make and model, sometimes just “car”. There were seldom registration numbers, no VIN numbers, and no identifying details of the seller. Many of the suspect records recorded the customer number “527”, which was assigned to “Margot Gollotoa”. Mr Cullen admitted he knew there was a problem with that customer number. That customer number was recorded against 80 per cent of the cars purchased by the company as scrap metal in May 2009 and 50 per cent of those bought in June 2009. There was often a mismatch between the name assigned to “527” and the names on dealer’s records which sometimes were “Shaun” or “Jared”.
[12] For all the vehicles there was evidence of obvious warning signs that they could be stolen: the high number of vehicles received by the yard in May and June 2009; the fact that most of them were roadworthy and in good condition with current warrants of fitness and registration labels; the fact that some had broken ignition barrels and side windows and personal possessions in them; the fact that most were worth much more than the average scrap price of $200 which the yard paid; the fact that the records showed many of them were supplied under the same client number; and the fact that most did not have registration plates.

First trial

[13] At Mr Cullen’s first trial he was charged and convicted as a principal on the offences of receiving the stolen motor vehicles. On appeal to this Court his convictions were set aside on a number of grounds and a retrial was ordered.[2]
[14] One of Mr Cullen’s successful grounds was that he could not commit the offences as a principal if TML held the scrap metal dealer’s licence under the SDP Act. This Court said:

[29] If Tamaki held the licence, Mr Cullen could only have been guilty of receiving if the Crown demonstrated that he was a party to it. That could have been done by proving, beyond reasonable doubt, either that he helped or encouraged Tamaki to commit the offence, or assisted in its commission.

[30] At trial, the Crown seems to have treated Tamaki as Mr Cullen’s alter ego. That approach conflated the different legal personalities of Mr Cullen, as an individual, and Tamaki, as a corporate entity. It explains the absence of any direction on that topic from the trial Judge. Nevertheless, the Judge’s misunderstanding as to the true owner of the licence contributed to some confusion about the basis on which Mr Cullen could be prosecuted. Plainly, if he did not hold the relevant licence, he could not commit the offence as a principal.

The new indictment

[15] Under the new indictment Mr Cullen was charged with receiving the relevant stolen vehicles “together with Tamaki Metals Ltd”. A pre-trial challenge to this wording was dismissed by this Court.[3]
[16] In dismissing the challenge, this Court said:

[8] ... As a general rule the Crown may accuse someone of being party to a crime without charging the principal at all, let alone having the principal stand trial at the same time. In such a case it is necessary to prove that the principal committed the offence, but that is not tantamount to a conviction, nor does it affect the party’s right to a fair trial. In this case, the company is not standing trial and it is not in jeopardy of conviction. It has no standing to intervene in Mr Cullen’s prosecution. On the record before us it was plainly appropriate to charge Mr Cullen as a party; indeed, he told us that he was “in charge of the company’s scrap metal business.” ...

Second trial

[17] The Crown case at the second trial was that Mr Cullen was the “controlling mind” of TML, knew that the vehicles were at the yard, intended to exercise control over them, was reckless as to whether they had been stolen, and, intentionally assisted the company to acquire possession of each vehicle. The Crown said that Mr Cullen and therefore TML intended to exercise control over the vehicles he knew were in the yard because they were going to be processed in accordance with the yard’s established procedure. The Crown position was that the jury could also rely on these same acts to establish both the primary offending by the company and Mr Cullen’s secondary offending by assisting, encouraging or procuring TML’s offending.
[18] The defence case was that TML did not receive any of the vehicles and that Mr Cullen could not therefore be liable personally as a party. TML was not liable because Mr Cullen’s role was largely administrative and was not sufficiently “hands on” that he had possession of the vehicles or the necessary mens rea to be attributed to TML.
[19] In the course of the trial, the defence sought to ensure that the question trail for the jury and the Judge’s directions properly reflected the defence case based on receipt of vehicles by other employees. There were arguments in chambers before Judge McNaughton relating to the question trail and his directions.
[20] The Judge determined that Mr Cullen was the only person whose acts and thoughts could be attributed to TML. He said:

To take possession the company needs to know that the car is there and the company needs to intend to exercise control over it and that is not Mr Leha that is Mr Cullen. ... And it is the company’s mental element, not the servant’s mental element. You can’t separate out physical possession, knowledge that it is there and intention to exercise control. They all have to happen together and it has to be the company. ... The company needs to ... get physical custody of the vehicle. The company, ie Mr Cullen, needs to know that vehicle is there. The company, ie Mr Cullen, needs to intend to exercise control and at that point the company has possession and at that point receiving is complete.

[21] The question trail and the directions reflected this determination.
[22] The question trail for each count followed the same format. For Count 1 it read:

1. Are you sure that the Nissan Primera ... was valued at between $500 and $1,000?

Not in dispute

2. Are you sure that the Nissan Primera ... was stolen or previously obtained by any other crime on 4 June 2009 at Auckland?

Not in dispute

3. Are you sure that the Nissan Primera ... came onto the yard at Tamaki Metals Limited between 4 June 2009 and 18 June 2009?

Not in dispute

4. Are you sure that Tamaki Metals Limited, ie the accused knew that vehicle was at the yard?

YES: Continue to next question. NO: Find the accused not guilty and stop.

5. Are you sure that Tamaki Metals Limited ie the accused intended to exercise control over the vehicle?

YES: Continue to question 6. NO: Find the accused not guilty and stop.

6. Are you sure that at the time Tamaki Metals Limited intended to exercise control over the vehicle that Tamaki Metals Limited ie the accused was reckless as to whether that vehicle was stolen or previously obtained by a crime?

YES: Continue to next question. NO: Find the accused not guilty and stop.

7. Are you sure that accused assisted encouraged or procured the company’s receiving of that vehicle?

YES: Continue to question 8. NO: Find the accused not guilty and stop.

8. Are you sure that assistance, encouragement or procurement was intentional?

[23] The Judge’s directions to the jury on the issue of TML’s knowledge were:

[34] But when it comes to knowledge, what is the mind of the company, how does the company know anything if it is just a legal construction on a piece of paper? Well, what the law does is identify the controlling officers of the company as effectively the mind and bodies of the company, and that is a question of law for me to decide. It is for me to decide who those people are, who the people are who would be effectively the mind, controlling mind and body of the company, and I direct you as a matter of law that that is the accused Mr Cullen. So that is not a question you have to decide, I decide it as a question of law. Effectively he is the only person in a position to be the controlling mind of the company, and that is obviously because he was the sole director, he was the chief executive officer, he controlled and was responsible for the company’s employees and that included the people who were doing the buying, Mr Leha, Tavake Leha, Ron McPherson, Clayton Rogers. None of those people would qualify as a directing mind of company so for your purposes the mind of the company is the mind of the accused Mr Cullen.

[35] So question 4 requires you to be sure that Tamaki Metals Limited, that is the accused Mr Cullen, knew that the particular vehicle and in this case it is Nissan Primera ... was at the yard.

[24] On the issue of the nature of Mr Cullen’s liability as a party, the Judge’s directions were:

[71] Next question. Question 7. So if you have got this far you have found or you are satisfied beyond reasonable doubt that Tamaki Metals Limited has committed the crime of receiving, and so questions 7 and 8 deal with the accused’s participation in that crime as a party, and there are two questions you need to answer. The first question 7 is, “Are you sure that the accused Mr Cullen assisted, encouraged, or procured the company’s receiving of that vehicle?” Well on the prosecution case the accused was intentionally assisting and encouraging each of these separate offences of receiving stolen vehicles by the company because he was completing dealer’s records after the purchase, and as long as he continued to complete those records and took no steps to have any of these vehicles removed from the yard and let the processing of these cars continue, cars being driven in in good condition at the start of the process and hauled out crushed and stripped on the back of the truck at the end, the Crown say to you he was assisting and encouraging each transaction because this was an ongoing operation week in, week out. None of this could have happened without his encouragement and assistance, and the Crown rely on exactly the same evidence to answer question 7. The dealer’s records, the use of number 527, the number of cars coming in, their condition, the lack of registration plates, the damaged ignition barrels ....

[25] The Judge’s directions on the issue of the point in time at which recklessness had to be established were:

[52] And the time at which you assess that state of mind is the point at which the company, which means Mr Cullen, at the point that the company Mr Cullen intended to exercise control over the vehicle. So in a sense, what happened to the vehicle before that is not strictly relevant. Someone else has already bought this car, someone else has already inspected it, but that is not relevant. What you need to do is assess the accused’s state of mind, the company’s state of mind at the point where he decided to exercise control over it. Not back at the point where the car was actually bought by someone else and the money handed over, but when Mr Cullen knew the car was there and when he intended to exercise control over it.

[53] So whatever was going on at the front line, in the buying of the cars, you do not have to resolve that. You do not have to work out exactly how it was, how it was working. You do not need to be satisfied about that beyond a reasonable doubt. You do not have to work it out why all these cars came in in June or whether it happened in the weekend, on a Saturday or a Sunday, or whether it happened at night because the security was slack. You do not even [have] to decide who was buying these stolen cars, whether it was Mr Leha, Mr Rogers, Mr McPherson, or a combination or all three. None of that matters. It is the accused’s knowledge and intention that is important and the point at which you assess that is at the point where one, he knew the vehicle was on the yard; and two, at the point he intended to exercise control over it. And that might have happened later on in the day when the car was bought, it might have happened the next day, it might have happened two or three days later, it does not matter. But you need to make the assessment at the time he intended to exercise control over the particular vehicle, and the question you need to ask is, “Was he aware of the risk that the vehicle might be stolen, and did he take that risk? And given the nature of the risk which he recognised, was it unreasonable to take?” And this is where the Crown and defence direct most of [their] arguments.

Legal principles

[26] There is no dispute that:

company will comprise the acts and the state of mind of an individual or individuals.[9]

(f) The Courts have developed rules for determining whether and when the acts and the states of mind of a particular individual or particular individuals should be attributed to the company.[10] To determine these questions, courts examine the particular statutory provision creating the offence, Parliament’s policy intentions, and the particular company’s legal and actual management structures.[11]
(g) A person may be a party to the offence of receiving if he or she assists or encourages a company, as the principal party, to commit the offence.[12]
(h) Subject to any contrary statutory provision, a person whose acts and state of mind are attributed to a company may also be personally liable for the same offence.[13]

Attribution of Mr Cullen’s acts and state of mind to TML

[27] The underlying dispute in the case is whether Judge McNaughton was right to determine that the acts and state of mind of Mr Cullen, and only Mr Cullen, could be attributed to TML for the purpose of TML’s offence under s 246. Mr Cassidy’s principal submission is that the Judge was wrong because the acts and states of mind of the other employees of TML should not have been excluded.
[28] An examination of s 246 does not provide any clear guidance on the question of attribution for receiving by a company. Nor are Parliament’s intentions apparent from the statutory position. In the case of a company with a licence under the SDP Act there is, however, some indication that the company’s offending would need to involve senior management because of the unlikelihood of Parliament intending the licence under the Act to be lost merely as a result of the actions of junior employees. The focus of the SDP Act appears to be on the actions of the licence holder and those responsible for its management.[14]
[29] When, however, TML’s legal and actual management structures are examined the position is clear:
[30] In light of this examination of the legal and actual management structures of TML, we agree with Judge McNaughton’s determination that as a matter of law only the acts and state of mind of Mr Cullen could properly be attributed to TML.
[31] Judge McNaughton was correct to view the matter as a question of law. As Lord Reid said in Tesco Supermarkets Ltd v Nattrass:[16]

It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company’s servant or agent. In that case any liability of the company can only be a statutory or vicarious liability.

[32] If, in a jury trial, the facts on which the question of law is to be determined are in dispute, then the facts will need to be left to the jury to find in the first instance.[17] But if, as in this case, the relevant facts are not in dispute, the Judge will be in a position to give the jury an appropriate direction on the question of law on the basis of the undisputed facts.
[33] At the same time it remained open to Mr Cullen to raise as a defence, as he did at trial, that no offence was committed by TML because the stolen vehicles were in fact “received” by Messrs Leha, Rogers and McPherson and not by Mr Cullen who, it was said, did not know that the vehicles were in the yard when they were received and was therefore unable to form the requisite reckless intent at the critical time. Questions 4, 5 and 6 in the Question Trail and the Judge’s directions correctly left these factual issues for the jury.
[34] Once it is accepted that the Judge was correct to determine the question of law in relation to the attribution of Mr Cullen’s acts and state of mind to TML, the two remaining grounds of appeal may be addressed shortly.

The nature of Mr Cullen’s liability as a party

[35] Mr Cassidy submits that the Judge’s description of Mr Cullen’s assistance and encouragement of TML’s offending by completing the records and taking no steps to have any of the vehicles removed from the yard and letting the processing continue was not evidence of secondary participation as it postdated the completion of TML’s receiving. This type of evidence was simply evidence upon which the jury could have inferred TML’s possession of the stolen vehicles. It established the physical element of the offending. This submission is dependent on the acceptance of the related proposition, contrary to the Judge’s attribution direction, that TML received the vehicles via the acts of other employees.
[36] We do not accept this submission. The Judge’s direction was an adequate explanation to the jury about how Mr Cullen could be a secondary party to TML’s criminal offending by offering intentional assistance and encouragement. Mr Cassidy’s reference to the timing of the receiving is addressed in the context of the next ground of appeal.

The point in time at which recklessness had to be established

[37] Mr Cassidy submits that confusion has arisen because Judge McNaughton formed the erroneous view that TML could only take possession once Mr Cullen had knowledge of the vehicle and intended to exercise control over it. The Judge erred in treating Mr Cullen and TML as the same entity. The possibility that another employee could have, in a legal sense, taken reckless possession on behalf of TML was wrongly excluded.
[38] We do not accept this submission because, as the Crown points out, it relies on the unfounded complaint that Judge McNaughton erred in refusing to attribute the acts of the other employers in purchasing vehicles to TML. As we have already upheld the Judge’s direction on attribution, there was no error in respect of his direction as to the time at which recklessness had to be established. There is nothing exceptional in the proposition that a vehicle might be on TML’s yard without being in its possession (until it came to the attention of Mr Cullen). It was the timing of Mr Cullen’s recklessness that mattered, not any recklessness by the other employees whose acts and state of mind could not in the circumstances of this case be attributed to TML.
[39] In support of his submission on this ground of appeal, Mr Cassidy also argues that a distinction is to be drawn, in relation to what acts or states of mind of employees can be attributed to TML, between the act of taking possession, on the one hand, and the state of mind concerning recklessness, on the other. That proposition would mean that the acts of the other employees, acting within their actual or apparent authority from TML, are sufficient to constitute the physical element of receipt of the property by TML, but their state of mind is not attributable to TML so as to establish the mental element of recklessness. On Mr Cassidy’s analysis, any recklessness on the part of Mr Cullen after the property has been physically received cannot constitute the mental element of TML’s offence, because it is later in time than the receipt, and accordingly Mr Cullen cannot be liable as a party.
[40] We do not consider that analysis is correct. Section 246(1) does not contemplate a separation of the physical element from the mental element in this way. The knowledge or recklessness of the defendant is to be assessed at the time of the receipt of the property. In this context where the defendant is a company, both elements are to be assessed at the time any person whose state of mind can be attributed to the company asserts control over the property. Only then is the property received by the company in terms of s 246.
[41] As Mr Cassidy acknowledges, if it was proved that Mr Cullen had received a stolen vehicle, then it would have been open to the jury to accept that, in dealing with the vehicle as he did, he assisted or encouraged TML’s offending. Mr Cassidy suggests, however, that, conceptually, this approach is not without difficulty as it involves the simultaneous offending of both the corporate entity and the individual. In other words, Mr Cullen is being a party to his own offending.
[42] In our view, however, there is no difficulty with TML and Mr Cullen, whose acts were attributed to TML, committing their offences simultaneously, TML as principal offender and Mr Cullen as a party to TML’s offending. Contrary to Mr Cassidy’s submission, this is not inconsistent with the previous decision of this Court which arose in the different context of charges against both TML and Mr Cullen as principal offenders when it was necessary to distinguish his mind from TML’s “mind”. Once Mr Cullen was charged with being a party to TML’s offending, his guilty mind established both TML’s guilty mind, as the principal offender, and his own guilty mind, as a party assisting and encouraging TML to commit the offences. Mr Cullen’s recklessness which constituted TML’s guilty mind and his own guilty assistance and encouragement existed simultaneously.

Result

[43] As none of the grounds of appeal has been substantiated, no miscarriage of justice has occurred and the appeal must therefore be dismissed.






Solicitors:
Crown Law Office, Wellington for Respondent

[1] Crimes Act 1961, s 385(1)(b) and (c).

[2] Cullen v R [2012] NZCA 413.

[3] Cullen v R [2013] NZCA 517.

[4] Crimes Act, s 246(3).

[5] Anderson v Police HC Wellington AP284/97, 10 October 1997 citing R v Cavendish [1961] 1 WLR 1083 (CA).

[6] R v Kennedy [2001] 1 NZLR 314 (CA) at [11].

[7] Andrew Simester, Warren Brookbanks and Neil Boister Principles of Criminal Law (4th ed, Brookers, Wellington, 2012) at [7.2] and Meaghan Wilkinson “Corporate Criminal Liability – The Move Towards Recognising Genuine Corporate Fault “ (2003) Canta L R 142.

[8] Secondhand Dealers and Pawnbrokers Act 2004 [SDP Act], s 16(1)(b) and definition of “specified offence” in s 4.

[9] Meridian Global Funds Management Asia Ltd v Securities Commission [1995] UKPC 26; [1995] 3 NZLR 7 (PC) at 12 where Lord Hoffmann observed that there is no such thing as a company “as such”, only the applicable rules; Simester, Brookbanks and Boister, above n 7, at [7.2.4]; and Neil Campbell “Corporate Personality” in Peter Watts, Neil Campbell and Christopher Hare (eds) Company Law in New Zealand (LexisNexis, Wellington, 2011) 27 at [2.3]–[2.4].

[10] Meridian, above n 9.

[11] Ibid (the activities of those in de facto control of a company were attributable); Nordik Industries Ltd v Regional Controller of Inland Revenue [1976] 1 NZLR 194 (SC); ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171 and Simester, Brookbanks and Boister, above n 7, at [7.2.4].

[12] Crimes Act, s 66(1)(b)–(d) and the two earlier decisions in this Court, above ns 1–2.

[13] Compare Cullen v R, above n 2, and Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121 at 128.

[14] SDP Act, ss 6 and 39.

[15] Cullen v R, above n 3, at [8]

[16] Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153 (HL) at 170.

[17] Tesco Supermarkets, above n 16, at 173.

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