Scutts v R [2015] NZCA 599 (10 December 2015)

Last Updated: 16 December 2015

IN THE COURT OF APPEAL OF NEW ZEALAND
CA426/2015 [2015] NZCA 599
BETWEEN	PETER JOHN SCUTTS Appellant
AND	THE QUEEN Respondent

Hearing:	19 October 2015
Court:	Harrison, Heath and Collins JJ
Counsel:	J R Billington QC and A J Steel for Appellant R S Reed and R R Parlane for Respondent
Judgment:	10 December 2015 at 10.30 am

JUDGMENT OF THE COURT

The appeal against conviction is dismissed.
____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Introduction

[1] The appellant, Peter Scutts, was found guilty following a judge-alone trial before Peters J in the High Court at Auckland of one charge of agreeing to receive a secret reward for procuring a contract in breach of s 8(1) of the Secret Commissions Act 1910.^[1] He was also found guilty of 16 charges of dishonestly using a document under s 228(b) of the Crimes Act 1961. He was convicted and sentenced to home detention.^[2]
[2] Mr Scutts appeals against his conviction on all charges but not against sentence. His primary ground, as it was recast in argument by Mr Billington QC, is that Peters J failed to give any or adequate reasons for her verdict, in particular for rejecting the evidence of the two defence witnesses. In Mr Billington’s submission, the Judge failed to apply the criminal standard of proof beyond reasonable doubt in finding Mr Scutts guilty of the charges. It was common ground between Mr Billington and Ms Reed for the Crown that the result of Mr Scutts’ appeal against conviction on all charges stands or falls on our determination of the Secret Commissions Act charge (the s 8(1) charge).

Statutory provisions

[3] In order to give context to Mr Scutts’ appeal, it is necessary to start by setting out s 8 of the Secret Commissions Act, which materially provides:

8 Receiving secret reward for procuring contracts an offence

(1) Every person is guilty of an offence who advises any person to enter into a contract with a third person and receives or agrees to receive from that third person, without the knowledge and consent of the person so advised, any gift or consideration as an inducement or reward for the giving of that advice or the procuring of that contract, unless the person giving that advice himself acts as the agent of the third person in entering into the contract, or is to the knowledge of the person so advised the agent of that third person.

(2) For the purposes of this section a person shall be deemed to advise another person to enter into a contract if he makes to that other person any statement or suggestion with intent to induce him to enter into the contract.

[4] Adopting the language of the section, the Serious Fraud Office (SFO) charged that Mr Scutts in his capacity as agent for the New Zealand Wine Company (NZWC):

... between 2 February 2011 and 13 October 2011 at Auckland ... having advised [NZWC] to enter into a contract with Liquor Marketing Group [LMG], agreed to receive from [LMG], without the knowledge and consent of [NZWC], consideration as a reward for the giving of that advice, namely $AUD1 per case for any [NZWC] wine distributed by [LMG], such wine having been supplied by [NZWC] to [LMG] under the contract.

(Emphasis added.)

[5] The 16 charges of dishonest use of documents arose from Mr Scutts’ submission of invoices, issued monthly from 31 May 2011 to 13 October 2011 under the name of a different entity, Rochfort Rees Wine Company Ltd (Rochfort), to LMG for what were termed “marketing services”. On the Crown case, the invoices were the mechanism for LMG’s payment to Mr Scutts of the agreed secret commission of AUD 1 per case of wine supplied by NZWC.

Factual background

(a) Parties

[6] NZWC is, as its name suggests, a wholesaler of wines. Mr Scutts is a highly experienced liquor industry executive. On 17 November 2009 NZWC engaged him to act as a consultant. NZWC was in financial difficulty and wished to increase its sales in the Australian market. One of Mr Scutts’ immediate priorities was to assist the company in that purpose. In August 2010 NZWC agreed to relocate Mr Scutts from Auckland to Sydney.
[7] LMG is a not-for-profit corporate owned by various hotels, bars and liquor stores. The company acquires a range of alcoholic products for supply to hotels. Two of its subsidiaries were Murray Bridge Wine Company Pty Ltd and Hotel Liquor Wholesales. Two of the banners under which LMG’s retailers traded were Harry Brown and Down Under Cellars. LMG had its own labels for wine which it bottled, labelled and packaged. Towards the end of 2010 LMG sought to identify other suppliers of New Zealand sauvignon blanc for its own label wines.
[8] Rochfort was incorporated on 21 July 2008. At all material times the shares in the company were held jointly by Mr Scutts and his son, Oliver, or by Mr Scutts’ wife and Oliver. Mr Scutts was a director of Rochfort between July and December 2008 and again from July 2010. Oliver Scutts is a young winemaker. Rochfort was set up as a vehicle through which he would learn about the wine industry under his father’s guidance. Rochfort purchased grapes and engaged contract winemakers for its own wine labels. Also, as Peters J noted, Mr Scutts’ consultancy income from NZWC was paid into Rochfort’s New Zealand bank account.
[9] At all relevant times Douglas Finlay was LMG’s general manager. John Scott was his superior. Both men were known to Mr Scutts. Indeed, through their association Rochfort supplied wine to LMG in 2008, 2009 and 2010.

(b) LMG/Scutts agreement

[10] Messrs Scutts and Finlay met on several occasions in Australia and New Zealand in late 2010 and in 2011 and dined together on 28 September 2010. Of direct relevance is this letter from Mr Finlay to Mr Scutts dated 20 October 2010:

20^th October 2010

Peter Scutts

Consultant

Rochfort Rees Wine Company

PO Box 37-643

Parnell 1015

Auckland

New Zealand

Peter

LMG wish Rochfort Rees Wine Company to be their provider of house controlled labels sourced for New Zealand wines.

The agreement is subject to LMG and Rochfort Rees Wine Company agreeing by 1^st July each year the terms of supply for the coming 12 months, 1^st July – 30^th June. If an agreement of these terms cannot be reached, LMG can terminate with 3 months notice and without penalty. During this notice period supply will continue at the previous year’s terms.

Rochfort Rees may during the period of agreement subcontract the supply of product to LMG. At all times Rochfort Rees is responsible for the quality of the products supplied including packaging and for third party adherence to the commercial terms agreed at the time.

As consideration for providing this service and for providing ongoing market support LMG agrees to pay Rochfort Rees $A1.00 per case sold to its retail customers via LMG’s national warehouse distributors.

Yours sincerely

Douglas Finlay

GM Harry Brown Merchant Trader,

Down Under Cellars.

(Emphasis added.)

[11] Mr Finlay’s letter is the evidential foundation for the Crown’s case. The Crown says that the letter constituted the first and contested element of the s 8(1) charge: the agreement between LMG and Mr Scutts (the October 2010 agreement) whereby the latter agreed to receive from the former consideration of AUD1 per case of wine supplied by Rochfort or its subcontractor as a reward for advising NZWC to enter into a contract with LMG in 2011. Proof that the letter was sent on or about 20 October 2010 was essential to the Crown’s case.

(c) NZWC/LMG contract

[12] On 2 March 2011 Mr Finlay travelled to NZWC’s premises in Blenheim, Marlborough where he and Mr Scutts negotiated a contract entered into later that day between NZWC and LMG (the 2011 NZWC supply contract). Mr Scutts was still at that time an independent consultant, acting in an advisory capacity for NZWC. We adopt Peters J’s summary of the contract’s terms as follows:

[46] The NZWC/LMG contract required NZWC to supply a minimum of 60,000 cases of Sauvignon Blanc per annum at $38 per case to LMG in Queensland and Western Australia. This Sauvignon Blanc became LMG’s own label wine. The contract also provided for LMG to design the packaging, with NZWC to produce all packaging “components”, that is the wine would be shipped to Australia ready for sale. The price of $38 per case was to apply for the first 12 months, and be subject to annual review thereafter.

[47] The deal was attractive to NZWC. The quantity – 60,000 cases – was substantial and the price acceptable in the prevailing conditions, because it would be supplemented by a substantial rebate available to the company in the Australian market. As I have said, the terms of the NZWC/LMG contract were subsequently reduced to writing. NZWC’s first shipment was made in May 2011.

[13] The 2011 NZWC supply contract, and Mr Scutts’ participation in its negotiation, constituted the second and uncontested element of the s 8(1) charge: Mr Scutts’ advice to NZWC to enter into a contract with LMG.
[14] In June 2011 NZWC’s chief executive relocated from New Zealand to Australia. Mr Scutts was appointed in his place. His terms of appointment were confirmed in a letter from NZWC dated 7 June 2011 and in a signed contract dated 24 June 2011.
[15] The Judge recited Mr Scutts’ declaration of interest to the NZWC board in July 2011 as follows:

[65] The minutes of NZWC’s board meeting on 28 July 2011 (which are agreed to be accurate) record the following disclosure by Mr Scutts:

... Peter Scutts Re LMG – Declaration of Interest

Peter explained that he was contacted by Douglas Finlay from LMG and asked if [Rochfort] could provide consulting services to LMG in terms of selling the wine that NZWC sells to LMG. Peter explained that his son and wife are the shareholders of [Rochfort] and that his son Oliver would provide the advice. NZWC to supply the wine.

Board comfortable with this situation. ...

[16] The Judge found that:

[66] This disclosure was inaccurate. As of July 2011, Mr Scutts and Oliver were joint shareholders of 98 per cent of the shares in [Rochfort] and Mr Scutts was a director of the company. Moreover, Mr Finlay’s evidence was that Oliver did not provide any consultancy services to LMG.

(d) Invoices

[17] NZWC’s first shipment of wine to LMG left New Zealand on 2 May 2011. From May 2011 onwards Rochfort submitted 16 monthly invoices to LMG for what were described as “marketing services”. Apart from the first and second invoices for AUD 768 and AUD 1,203 respectively, and the December 2011 invoice for AUD 5781.79, the invoices were regularly for sums in between AUD 2,100 and AUD 4,600. In total they came to AUD 53,574.12.
[18] Each invoice was handwritten and provided details of Mr Scutts’ personal bank account for payment purposes and, with one or two exceptions, purported to be signed by Oliver Scutts. At an initial interview with the SFO in May 2013 Mr Scutts denied that the handwriting on the invoices was his. He said he did not recall whether he had signed Oliver’s name. Three days later he advised the SFO that he had been “startled, ... nervous and confused” in the interview; and that he had indeed handwritten the invoices and signed Oliver’s name.
[19] All invoice payments by LMG were in fact made into Mr Scutts’ personal bank account. On the Crown’s case, LMG’s payments and Mr Scutts’ receipt of these funds was evidence of the parties’ performance of the 20 October 2010 agreement to reward Mr Scutts for advising NZWC to enter into the 2011 NZWC supply contract. Mr Scutts did not give evidence at trial but called Messrs Finlay and Scott in support of his defence that the payments were made in consideration for provision of different services under a later and unrelated agreement.
[20] There is no substantive challenge to the Judge’s summary of the evidence given by Messrs Finlay and Scott about the alleged later agreement as follows:

[48] In April 2011, LMG requested assistance from NZWC to market the wine. LMG wished to publish the name of the winemaker on the back label of the bottle and to publish a photo of the winemaker in its marketing catalogues. Although provision of such support is said to be “standard practice”, it was not expressly provided for in the NZWC/LMG contract and Mr Pearce, NZWC’s winemaker, refused to allow his name or photo to be used.

[49] Mr Finlay’s evidence was that, given the refusal, he proposed to Mr Scutts that Oliver Scutts be portrayed as the winemaker, and that LMG would pay $1 per case of wine that LMG sold to its retailers for provision of this assistance.

[50] In cross-examination Mr Finlay said that the fee was also to pay for other consultancy services provided by Mr Scutts. Mr Finlay’s evidence was that he tended to seek Mr Scutts’ advice on the New Zealand market, that he doubted NZWC would survive its financial difficulties and that Mr Scutts was likely to be of more use to LMG than NZWC in the future, hence his willingness to “invest” in Mr Scutts.

[51] Mr Finlay was adamant that he and Mr Scutts agreed on the fee of $1 per case after the NZWC/LMG contract was entered into and not before, and that the fee was not a reward to Mr Scutts for advising NZWC to enter into the NZWC/LMG contract.

[52] Mr Scott’s evidence was consistent with Mr Finlay’s evidence, in that he believed the $1 per case to be a payment for the marketing assistance and an arrangement entered into after the NZWC/LMG contract had been agreed. I bear in mind however that Mr Scott was not a party to the discussions.

[53] One issue at trial was when LMG commenced using Oliver’s name and photograph to promote its own label wines. The evidence includes emails between Mr Scutts and Oliver in May 2011 regarding provision of a photograph to LMG, but these were in response to a request by LMG for Oliver’s photograph to market [Rochfort’s] wines, not NZWC’s.

[54] By email dated 9 May 2011, Mr Scutts wrote to Oliver:

... Doug Finlay needs a photo [of] you looking like a wine company owner/winemaker etc asap.

Can you send it to him asap at ...

[55] The next day Oliver asked “what photo” and Mr Scutts replied that Mr Finlay:

... just needs a photo of you to promote [Rochfort] in his catalogues....

[56] On 11 May 2011, Jessica Whiddon sent an email to Mr Scutts, copied to Mr Finlay, saying:

Hi Peter,

Douglas has advised me to use Oliver as the “winemaker” for Rochfort Rees.

Would you please be able to send through a high res image of him to use in the catalogue? I need it fairly urgently as we are going to print with it today.

Thanks,

Jess

[57] These emails are not evidence of the supply of a photo to market NZWC produced wine. Down Under Cellars’ marketing catalogue dated June 2011 did include a photo of Oliver, but it was associated with [a Rochfort] wine. But the first occasion on which Oliver’s photo was used to promote LMG’s own label wine in the catalogue [was] for September 2011 (and in the catalogues for several months thereafter), and this was some four months after Mr Scutts submitted the first invoice in dispute.

(Footnotes omitted.)

Legal principles

[21] Counsel did not address us on the legal elements of the s 8(1) charge, apparently because they assumed that proof of its factual elements would constitute the offence as charged. It will suffice for our purposes to summarise briefly the relevant statutory policy and purpose.
[22] It appears that s 8 owes its genesis to English and Australian legislation.^[3] Importantly, however, our Secret Commissions Act was “not a slavish copy of any Act in existence”^[4] but was seen as a selection of the best features of each.^[5] The Act was apparently introduced to combat and outlaw what was seen as a widespread practice of agents secretly accepting payments from third parties relating to their principal’s business,^[6] which was “exercis[ing] a pernicious influence upon the commercial morality of the community”.^[7] The same objective has remained important in sentencing offenders on charges brought under the Act.^[8] Its terms make clear that it was criminalising an existing civil wrong from agency law.^[9]
[23] There is little relevant authority on s 8. However, we accept that its policy is directed to a situation where an agent has a vested interest in the outcome of a transaction, which must be disclosed to his or her principal or at least ascertainable: it is trite that the principal cannot make an independent assessment about its agent’s objectivity or motivation in advising the entry into a contract if the existence of the commission is not known.^[10] Its purpose may also properly be described as criminalising non-disclosure, to ensure that the principal is aware that its agent is being paid by another party for the advice on which the principal acts.^[11] Without disclosure, the agent will have been unjustly enriched.^[12]
[24] The other legal issue relevant to Mr Scutts’ appeal is the nature and extent of a Judge’s obligation to give reasons for a verdict when sitting alone: its context is Mr Billington’s submission that the Judge failed to assess the credibility and reliability of Messrs Finlay and Scott whose evidence, if accepted by her or if it had left her unsure, would have resulted in proper verdicts of acquittal.
[25] The requirements imposed on a Judge to give reasons for a verdict when sitting alone have evolved since this Court’s decisions in R v Awatere and R v Atkinson.^[13] While, as Ms Reed observed, those decisions established the principle that Judges are not generally required to give reasons, they also recognised that in certain cases a failure may lead to an unsafe verdict. However, shortly after, in R v Connell, this Court accepted that where a witness’ credibility is in issue, and where critical evidence is definitely rejected, a Judge should “say so explicitly”.^[14] Short form decisions, stating the essential elements of the Judge’s reasoning, were acceptable.^[15]
[26] The Criminal Procedure Act 2011 (s 106(2)) requires a judge sitting alone to give reasons. Elections by defendants of trial by a judge alone on dishonesty or fraud charges, often involving factual and financial complexity, are likely to be influenced by the right to a reasoned verdict, and a right of appeal where those reasons are legally or factually unsustainable. In such cases, the judge’s reasons should be stated reasonably fully, allowing the parties to understand clearly the grounds for a decision and an appeal court to identify the issues and the judge’s reasoning relevant to them.^[16] First instance exemplars of this requirement are found in recent decisions of this Court.^[17]
[27] Mr Billington cited this Court’s decision in E (CA799/2012) v R^[18] as authority for two related propositions, which we accept. First, relying on the Court’s statement that “it is trite that our criminal justice system depends essentially on oral testimony”,^[19] he submitted that where oral evidence is given it must be tested by the trial Judge “against the objective facts, the contemporaneous documents, the motives of those involved, or lack of them, and the overall probabilities”.^[20]
[28] Second, Mr Billington submitted that where a witness’ credibility and reliability are at issue a Judge should undertake an assessment of the type suggested in E (CA799/2012) v R as follows:

[44] In making the wider assessment we agree with Lord Bingham that the following factors are relevant both in relation to the credibility and reliability of the evidence of a witness:

(a) The consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred.
(b) The internal consistency of the evidence of the witness.
(c) Consistency with what the witness has said or deposed on other occasions.
(d) The credit of the witness in relation to matters not germane to the litigation.

[45] To this list, we would add:

(e) The inherent plausibility of the evidence of the witness (does it make sense?) and,
(f) Where appropriate, consistency with any contemporaneous documentary evidence.

(Footnote omitted.)

Appeal

[29] Mr Billington’s argument focussed on the Judge’s reasons for finding the Crown had proved the existence of the agreement necessary to establish the s 8(1) charge, which she summarised as follows:

[85] First, the letter of 20 October 2010 is compelling evidence of such an agreement.

[86] Secondly, I consider Mr Finlay’s evidence of the arrangement he said he proposed in April 2011 to be implausible. The emails exchanged in May 2011 relate to provision of a photograph of Oliver Scutts to promote [Rochfort] wines, not NZWC’s. If I were to accept Mr Finlay’s evidence, I would have to accept that LMG had paid invoices in each of May, June, July and August 2011 even though it had not used Oliver’s photograph to promote NZWC wines. I bear in mind that Mr Finlay also said the payments were for Mr Scutts’ consultancy services and were made with a view to a long term relationship. However, it is illogical to determine a fee for consultancy services and/or marketing assistance by reference to sales by LMG to its retailers.

[87] For the sake of completeness I record Crown counsel’s submission that LMG would have renegotiated the price per case with NZWC if it were truly required to pay separately for marketing assistance. I do not put any weight on that submission. The NZWC/LMG contract was silent on the issue and it would be a matter for LMG whether it sought some reduction in price.

Other matters

[88] The Crown relied on other circumstantial evidence as supporting its case. It is correct that Mr Scutts’ actions to further [Rochfort]’s business were inconsistent with his obligations to NZWC as its CEO. I put that matter to one side, however, as it immaterial to the factual issues I am required to determine.

[89] I am satisfied that Mr Scutts lied to and/or withheld information from NZWC’s Board at its July 2011 meeting in the respects to which I have already referred. I am also satisfied that Mr Scutts’ actions in signing Oliver’s signature to the invoices was in essence a lie. It is apparent that Oliver was not involved in the arrangement.

[90] I am also satisfied that Mr Scutts lied in his interview with the SFO on 24 May 2013. For instance, Mr Scutts was asked whether the handwriting on the June 2011 invoice was his and his response was that he did not believe so, he did not recall. Mr Scutts denied seeing the invoice for July 2011 prior to the interview. Likewise in respect of the invoice for August 2011. Mr Scutts was asked whose signature appeared on the invoice rendered for services in December 2011 and particularly whether he had signed Oliver’s signature. Mr Scutts said that he had not done so. Mr Scutts also told the SFO personnel that Oliver had prepared the RRWC invoices in question, when he had not.

[91] I have reminded myself of the matters referred to in s 124(3) Evidence Act 2006. I am conscious also that Mr Scutts advised the SFO of the correct position on 27 May 2013, being the first working day after the interview. I do, however, attach weight to these lies to the SFO in reaching my verdicts. There would be no reason for Mr Scutts to lie to the SFO regarding these matters if the agreement to pay the $1 per case had been reached in May 2011, for the reasons that Mr Finlay gave.

(Footnotes omitted.)

[30] In Mr Billington’s submission the Judge’s decision does not show a credible reasoning process because she failed to make express findings on the essential elements of the charge sufficient to justify the result. Mr Billington contrasted Mr Scutts’ trial to one raising a credibility contest between witnesses for the Crown and defence where the Judge makes a preferential finding. Here, he says, the Judge has put one side of the case against another as if Mr Scutts was bound to prove his innocence, contrary to the Crown’s burden of proving the charges beyond reasonable doubt.
[31] Mr Billington says the Judge’s reasons are so incomplete as to amount to a failure a discharge her judicial function. In particular, he says, the Judge failed to address the reasonable possibility that LMG’s agreement to pay Rochfort’s invoices was unconnected to Mr Scutts’ advice to NZWC to enter into the 2011 NZWC supply contract; and that the invoice payments were not made as a reward for that advice.

Decision

(a) 20 October 2010 agreement

[32] The Crown’s case was circumstantial, based on proof of these steps:

• (a) There was an underlying agreement between LMG and Mr Scutts on 20 October 2010 whereby the former agreed to pay the latter AUD 1 per case of wine supplied by Rochfort or a nominated subcontractor.
• (b) On 20 October 2010 Mr Scutts was an agent for NZWC, and was later its full time paid employee.
• (c) In terms of the underlying agreement, Rochfort through Mr Scutts later subcontracted its supply obligations to NZWC, Mr Scutts’ principal.
• (d) The payments made by LMG in accordance with the invoices submitted by Mr Scutts from May 2011 onwards of AUD 1 per case supplied by NZWC proved the performance of the original agreement.

[33] While the first, third and fourth steps were in dispute, it was common ground both in the High Court and before us that the Crown’s case would fail unless it could establish that LMG’s letter preceded the 2011 NZWC supply contract (and LMG’s payments) in 2011. On its face, and without a contradictory explanation from Mr Scutts, the letter gave rise to the compelling inference that it was written on its stated date. Mr Scutts sought to raise a reasonable doubt about the date by calling Mr Finlay. He asserted that he wrote the letter on or about 9 January 2012.
[34] Mr Billington was critical of the Crown’s reliance solely on the 20 October 2010 letter and the subsequent chain of events including NZWC’s supply of wine and LMG’s payments to Mr Scutts. In his submission, given Mr Scutts’ unavailability, the Crown should have called Mr Finlay, as the author of the 20 October 2010 letter, to prove the existence of the underlying agreement to reward Mr Scutts. Mr Scutts’ counsel would then have had the opportunity to cross-examine Mr Finlay and lead evidence which the Crown could not impeach that the letter was in fact written in early January 2012.
[35] We reject this submission. There was no challenge to the letter’s authenticity and the Crown produced it without objection at trial.^[21] Accordingly, in the absence of contrary evidence, it must be presumed that the letter’s nature, origin and contents are as shown on its face. The letter spoke for itself. Proof of the Crown’s case did not rely upon oral evidence from its author. Also, although Mr Finlay was technically compellable,^[22] he resides in Australia and so was under no legal obligation to attend and give evidence for the Crown in a New Zealand court.^[23] Moreover, the Crown has a well settled discretion as to which witnesses it calls to prove its allegations,^[24] so long as the witness is available for the defence to call,^[25] as Mr Finlay was in this case.
[36] Mr Billington’s complaint is essentially that Mr Scutts lost a tactical, and prospectively substantive, advantage by the Crown’s decision not to call Mr Finlay. That cannot be a ground for criticising the Crown or interfering with the verdict.
[37] The Judge rejected Mr Finlay’s evidence in these terms:

[80] The Crown case on this point is that NZWC’s supply to LMG was “subcontracted” supply by RRWC to LMG, as the third paragraph of the letter anticipates might occur, and that LMG paid the $1 per case in accordance with the final paragraph of the letter, such being an agreement to pay consideration as a reward within the meaning of s 8(1).

[81] Mr Finlay’s evidence was quite different. It was that Mr Scutts wished to have a basis on which to negotiate an agreement with LMG after Mr Finlay’s departure. His evidence was that Mr Scutts emailed the draft letter to him in early January 2012 and that he, Mr Finlay, printed, signed and returned the letter without paying the date or “sign off” any attention given his state of health. Mr Finlay had no objection to signing the letter, given that it did not commit LMG to any future course of action.

[82] I reject Mr Finlay’s evidence on this matter. I find as a fact that the letter was written on or about 20 October 2010. That date is consistent with the fact that Mr Scutts and Mr Finlay were in discussion at that time regarding the supply of wine. The subsequent payment of the $1 per case is consistent with the final paragraph of the letter. As at 20 October 2010 the letter is accurate in recording that Mr Finlay was the General Manager of Harry Brown and Down Under Cellars. The letter would not be accurate as of January 2012, Mr Finlay having ceased to be general manager of the two banners in October 2011, some three or four months earlier.

[83] Moreover, there would be no good reason for Mr Scutts to “backdate” the letter. Mr Finlay’s evidence requires me to accept that Mr Scutts sent Mr Finlay a draft letter in January 2012 which was dated some 15 months earlier in October 2010.

[38] Peters J’s reasons are clear and concise, and provide a proper foundation for her first principal finding (at [85]). In argument Mr Billington did not pursue the challenge to this finding which he had developed in his written submissions. He accepted that the Judge’s rejection of Mr Finlay’s evidence on this issue, and her consequential finding that the letter was written on its date, 20 October 2010, were open to her.
[39] What the Judge omitted to state explicitly in her reasons was why she rejected Mr Finlay’s evidence. The tenor of his account, maintained under cross-examination calling into question Mr Finlay’s credibility, was such that it could not possibly have been rejected for unreliability. We are satisfied that the Judge must have disbelieved Mr Finlay’s evidence on this issue. In terms of the requirements cited by Mr Billington from E (CA799/2012) v R, the Judge had a proper foundation for concluding that Mr Finlay’s account of the date of the letter was inconsistent with the objective facts. It was also highly implausible.
[40] It is unfortunate that the Judge did not articulate an express credibility finding. But we have no difficulty inferring that she disbelieved Mr Finlay. In this respect we acknowledge also her undoubted benefits in assessing the evidence enjoyed by her as trial Judge.^[26]

(b) 2011 NZWC supply contract

[41] The Judge’s finding on the first or threshold issue upheld the evidential foundation of the Crown case, of an agreement to pay Mr Scutts AUD 1 per case for wine supplied by Rochfort or its subcontractor. The subsequent payments gave rise to a compelling inference that the payments were linked to the October 2010 agreement, as consideration for Mr Scutts’ performance of the subcontracted duties. In the absence of a contrary explanation sufficiently credible to give rise to a reasonable doubt, verdicts of guilty were inevitable.
[42] As noted, Mr Scutts’ defence was that the invoiced payments were unrelated to the October 2010 agreement. His case was that the payments were made pursuant to an agreement reached in April or May 2011 between Messrs Finlay and Scutts to pay Rochfort AUD 1 per case in exchange for providing a photograph of Oliver Scutts for inclusion in its promotional material. Mr Scutts relied on the evidence of Messrs Finlay and Scott, either to establish affirmatively the existence of such an agreement or at least to raise a reasonable doubt that the invoices may have been paid to discharge a separate contractual obligation.
[43] This was the second principal issue for Peters J’s determination. Mr Scutts’ difficulty on appeal is that at trial he was relying on a witness whose exculpatory evidence on a closely related issue was not believed by the Judge. Again it is unfortunate but not fatal that the Judge did not preface her reasons on this second issue by reference to her conclusion that Mr Finlay was not a credible witness. It would have been improbable for a fact finder, where credibility was the central issue arising from a specific narrative of events, to disbelieve a witness on one contested issue but believe him on another.
[44] However, in our judgment the Judge’s express finding that Mr Finlay’s explanation was implausible (at [86]) – based principally on the timing mismatches, and Mr Finlay’s admission that a component of the AUD 1 per case payment was to secure Mr Scutts’ services “on the ground” – is logically connected to the evidence, especially when measured against these additional objective facts:

• (a) The unusual coincidence between the amount of AUD 1 per case agreed in the October 2010 agreement and the amount said to be agreed between the same parties under a separate contract in May 2011.
• (b) Mr Finlay dealt only with Mr Scutts, the principal party to the October 2010 agreement, and had no dealings with Oliver Scutts who was said to be the beneficiary of the alleged 2011 NZWC supply contract.
• (c) Mr Scutts signed the invoices in his son’s name and all payments were made to Mr Scutts’ personal account, not to his son or to Rochfort. It did not make sense for LMG to pay Mr Scutts for provision of his son’s services.

[45] There was also uncontradicted evidence of Mr Scutts’ untruthful explanation of events to the NZWC Board meeting in July 2011 (summarised at [66] of the decision), including his failure to disclose the terms of the October 2010 agreement on his submission of invoices to LMG relating to wine supplied by NZWC under the 2011 NZWC supply contract for payment into his own bank account. He also misled the Board by stating that Oliver was providing consultancy services to LMG and that Oliver was a principal shareholder in Rochfort. As Ms Reed submitted, Mr Scutts’ lies, repeated later to the Serious Fraud Office, are evidence that he did not have a genuine belief in the existence of the agreement to which he was allegedly a party. The Judge identified this factor (at [89]–[91]) although not in the specific legal context properly identified by Ms Reed.
[46] Mr Billington’s fallback position was that, even if the Judge rejected Mr Finlay’s evidence, she had no basis for rejecting Mr Scott’s evidence. Mr Billington elevated the Judge’s brief statement that she did not accept Mr Scott’s evidence (at [24] of the decision) to an adverse credibility finding for which there was no proper basis. However, when the Judge’s statement is read in context with her only other reference to Mr Scott’s evidence (at [52]) – that he was not a party to the direct negotiations between Messrs Finlay and Scutts in April and May 2011 – it is plain that she did not consider Mr Scott’s evidence material.
[47] Mr Billington raised two specific challenges to the Judge’s rejection of the defence evidence. First, he says, that Mr Scott’s evidence corroborated Mr Finlay’s account in significant respects. He relied on passages from the evidential transcript to the effect that Mr Scott and another member of the executive group, Sean Hogan, approved the alleged May 2011 arrangement. However, when read in its entirety, Mr Scott’s evidence simply confirms his reliance on Mr Finlay’s account of what was allegedly agreed with Mr Scutts. Mr Scott was not a participant. His approval of LMG’s payments does not assist in deciding whether the alleged agreement existed.
[48] Significantly, Mr Scott agreed in cross-examination that payments for the use of Oliver Scutts’ image as a winemaker were unique in the industry. That is particularly so where the supply contract was between LMG and NZWC to which Oliver Scutts was not a party. He also referred to Mr Finlay’s explanation for the payment as being that otherwise NZWC was not prepared to provide promotional support. As Ms Reed pointed out, Mr White, then NZWC’s chief executive officer, confirmed in evidence that provision of a winemaker’s photograph was not part of the contractual terms but that NZWC would have provided the image free of charge but for the dispute which arose and which prevented the company from doing so. He did not understand there was any problem about NZWC’s performance of its contractual obligations in failing to provide a photograph.
[49] Second, Mr Billington referred to what he said was a credible independent narrative supporting the evidence of Messrs Finlay and Scott. He was referring to the winemakers’ refusal to allow the use of their images on LMG promotional material leading to an employment dispute. However, the uncontested existence of that dispute is simply background narrative which might explain why LMG wanted to use Oliver Scutts’ image. The Judge was not satisfied that it answered or raised a doubt about all the incriminating evidence contradicting Mr Finlay’s account.

(c) Conclusion

[50] In summary, as a result of his election not to give evidence, Mr Scutts was forced, in order to raise a reasonable doubt about a strong circumstantial Crown case, to rely on the Judge’s acceptance of evidence from a witness whom she disbelieved. We repeat Mr Billington’s concession that the Judge’s rejection of Mr Finlay’s evidence was beyond challenge on the underlying issue of whether LMG’s letter was written on its stated date, 20 October 2010. The Judge’s conclusion that Mr Finlay’s evidence was implausible on the alleged May 2011 agreement was consistent with her earlier finding, and with the objective facts, the contemporaneous documents and the overall probabilities. Mr Scott’s evidence did not add anything material to Mr Finlay’s evidence.
[51] While they should have been expressed more comprehensively, explicitly, and within a more analytical structure, we are satisfied that the Judge’s reasons are sufficient to disclose a logical connection between the evidence, the issues and her verdicts.^[27] We are satisfied also that the Judge did not reverse or misapply the Crown’s burden of proof and her verdicts were reached according to the criminal standard of proof beyond reasonable doubt.
[52] We add that Mr Billington did not subject the Judge’s reasons for guilty verdict on the dishonest use charges to independent challenge, on the apparent premise of his acceptance that the Crimes Act verdicts were the logical consequences of the s 8(1) verdict. We are independently satisfied that the evidence of Mr Scutts’ falsification of his son’s signature on Rochfort’s invoices; his lies to the NZWC board and to the Serious Fraud Office; and his personal receipt of funds invoiced by Rochfort were compelling evidence of his use of the invoices to obtain a pecuniary advantage dishonestly and without claim of right. The Judge’s verdict on these charges cannot be impeached.

Result

[53] The appeal against conviction is dismissed.

Solicitors:
Grove Darlow and Partners, Auckland for Appellant
Crown Law Office, Wellington for Respondent

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^[1] R v Scutts [2015] NZHC 1108.

^[2] R v Scutts [2015] NZHC 1617.

^[3] See Prevention of Corruption Act 1906 (UK); Secret Commissions Prohibition Act 1905 (Vic); and Secret Commissions Act 1905 (Cth).

^[4] (9 October 1908) 143 NZPD LC 1153.

^[5] (3 July 1908) 143 NZPD HR 158; (9 October 1908) 143 NZPD LC 1153; Secret Commissions Bill 1908 (14-1) (memorandum) at 1.

^[6] (3 July 1908) 143 NZPD HR 159–60; (9–10 October 1908) 145 NZPD 1153–1154; (20 October 1910) 152 NZPD HR 659; Secret Commissions Bill 1908 (14-1) (memorandum) at 1.

^[7] Secret Commissions Bill 1908 (14-1) (memorandum) at 1.

^[8] R v Sew Hoy DC Dunedin CRI-2007-012-6139, 19 November 2009 at [4]–[5]; R v Taylor HC Auckland CRI-2006-092-1488, 6 July 2007 at [19]; Serious Fraud Office v Ellis HC Auckland CRI-2005-404-15827, 18 July 2006 at [12]–[13]; Serious Fraud Office v Ellis HC Auckland CRI-2005-404-15827, 21 July 2007 at [5].

^[9] See Laws of New Zealand Agency at [82] for a summary of the rule of agency law. It has a long history in New Zealand: see Dalgety v Moss [1866] Mac 495 (SC) at 499; Stanford v Gillies [1879] O, B & F 91 (SC) at 97–99; Ell v Harper (1886) NZLR 5 SC 66; Galloway v Pedersen (1915) 34 NZLR 513 (SC); Allen v Fama [1922] NZLR 1156 (SC) at 1158; Stubbs v Collett and Son Ltd (1926) 21 MCR 104 at 106; Mitchell v Silver [1932] NZLR 882 (SC and CA) at 907; C M Barnett and Son v Boyle Brothers [1932] NZLR 1087 (SC). More recently see McDonnell v Barton Realty Ltd [1992] 3 NZLR 418 (CA).

^[10] Guthrie v Taylor Parris Group Ltd (2002) 10 TCLR 367 (HC) at [42].

^[11] Money Managers Ltd v National Mortgage Brokers Ltd HC Auckland CIV-2003-404-7049, 8 December 2005 at [64].

^[12] Police v Leeming [1975] 1 NZLR 471 (SC) at 473–474.

^[13] R v Awatere [1982] NZCA 91; [1982] 1 NZLR 644 (CA) and R v Atkinson [1984] 1 CRNZ 240 (CA).

^[14] R v Connell [1985] NZCA 34; [1985] 2 NZLR 233 (CA) at 237–238.

^[15] At 237.

^[16] R v Eide [2004] NZCA 215; (2004) 21 CRNZ 212 (CA) at [21], cited in R v Wenzel [2010] NZCA 501 at [40].

^[17] Jeffries v R [2013] NZCA 188 at [194] (Dobson J); Wenzel v R [2013] NZCA 403 at [93] (Judge Winter); Wang v R [2014] NZCA 252 at [41] (Judge Cunningham); Mayer v R [2015] NZCA 206 at [15] (Judge Gibson).

^[18] E (CA799/2012) v R [2013] NZCA 678.

^[19] At [23].

^[20] Heffer v Tiffin Green (a firm) [1998] TLR 823 (Eng CA), cited with approval in Pharmacy Care Systems Ltd v Attorney-General [2004] NZCA 187; (2004) 2 NZCCLR 187 (CA) at [53].

^[21] See generally Evidence Act 2006, s 130 (authenticity) and s 9 (consent).

^[22] Section 71(1).

^[23] Solicitor-General v X [2009] NZCA 476 at [27].

^[24] R v Fuller [1966] NZLR 867 (CA) at 868; R v Brennan [2009] NZCA 339.

^[25] R v Wilkie CA6/05, 14 April 2005 at [11].

^[26] Austin Nicholls & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13]; Rae v International Insurance Brokers (Nelson and Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 197 and 199; and Blackwell v Chick [2015] NZCA 34 at [5].

^[27] R v REM [2008] 3 SCR 3 at [67].