Wynyard v R [2015] NZCA 610 (17 December 2015)

Last Updated: 20 January 2016

IN THE COURT OF APPEAL OF NEW ZEALAND
CA219/2015 [2015] NZCA 610
BETWEEN	GLENDA MARY WYNYARD Appellant
AND	THE QUEEN Respondent

Hearing:	4 November 2015
Court:	Randerson, Lang and Clifford JJ
Counsel:	P J Davison QC, R S Reed and H D L Steele for Appellant D La Hood and E Jones for Respondent
Judgment:	17 December 2015 at 9.30 am

INTERIM JUDGMENT OF THE COURT

1. The appeal against conviction is allowed in respect of Counts 3 and Counts 5–10. The convictions in relation to those charges are set aside and the sentences imposed in respect of them are quashed.
2. The appeal against conviction in respect of Count 11 is dismissed.

100. The remaining aspects of the appeal against sentence will be determined following receipt of the submissions directed to be filed at [60].

4. The grant of bail by the Court on 4 November 2015 is extended on existing terms pending delivery of the final judgment of the Court.

____________________________________________________________________

REASONS OF THE COURT

(Given by Lang J)

[1] Ms Wynyard stood trial before Judge Gibson sitting without a jury on 13 charges laid under the Crimes Act 1961. All of the charges were laid following the collapse of a business operated by her company, The Media Counsel Limited (the company). The charges related to the manner in which Ms Wynyard had caused the company to conduct its business during the final months before it went into liquidation. For reasons given on 27 March 2015, Judge Gibson found Ms Wynyard guilty on 11 of these charges.^[1] On 24 April 2015, the Judge sentenced Ms Wynyard to eight months home detention on the charges on which she was convicted.^[2]
[2] Ms Wynyard now appeals against conviction on eight of the charges on which she was convicted. The appeal relates to six charges of theft by a person in a special relationship, one charge of causing loss by deception and one charge of dishonestly using a document to obtain a pecuniary advantage. Ms Wynyard also appeals against sentence.

Background

[3] Ms Wynyard was the sole director of the company, and another company that she controlled was its only shareholder. The company’s business was the placement of advertising with media organisations on behalf of corporate clients.
[4] Media placement companies and agencies of this nature are able to obtain accreditation from the Print Media Accreditation Authority (PMAA). Accredited companies are able to place advertising with media organisations on terms that require payment on the last working day of the month following publication. Without accreditation, payment must be made at the time the advertising is placed.
[5] When the company was incorporated in 2005, it did not have accreditation. As a result, it was required to pay for advertising immediately on placement. It would not obtain payment from its own clients until some time later. To deal with the cash flow issue created by the lack of accreditation the company entered into a “place-through” agreement with an accredited agency, Carat New Zealand Limited trading under the name Aegis (Aegis). The company placed its advertising through Aegis and in doing so received the benefit of being able to delay payment. This agreement terminated in November 2008 when the company obtained its own accreditation.
[6] The company’s business grew rapidly. Its billings increased from $4.2 million in 2007 to $18.2 million in 2008, and then to $33.9 million during the year ended 31 March 2009. Projected billings for the year ended 31 March 2010 were approximately $52 million. Unfortunately, however, the margin of profit earned by the company on its billings was very slim. Its expenses also increased markedly as it employed more staff and moved to larger premises in order to accommodate the rapid increase in business. These factors, together with excessive drawings taken by Ms Wynyard, ultimately led to the company’s demise.
[7] By late 2008 the company was under significant cash flow pressure. In order to alleviate this it entered into a financing facility with Marac Finance Limited (Marac). The facility required the company to forward all its invoices to Marac at the end of each month. Marac would then approve some of the invoices, and at the beginning of the following month would provide the company with debt financing equivalent to 80 per cent of the face value of the approved invoices. The company directed its clients to pay all invoices directly to Marac. Once an approved invoice had been paid by a client, Marac would pay the final 20 per cent to the company minus a deduction of the applicable fees and interest. Payments for invoices that Marac had declined to approve were directed through Marac back to the company.
[8] The Marac facility ultimately provided the company with the ability to obtain funding of up to $3 million. The company executed several security documents in Marac’s favour in order to secure these advances. Marac registered financing statements in respect of these securities under the Personal Property Securities Act 1999 (PPSA).
[9] In mid-2009 the company lost its accreditation and was again unable to place advertisements with media organisations unless it paid for the advertising at the time of placement. It therefore entered into another arrangement with Aegis. The new arrangement came into effect on 1 November 2009, and was intended to apply to all invoices rendered by the company after that date. Remarkably, Aegis did not search the PPSA register and was not aware that the company’s earlier arrangement with Marac remained in effect.
[10] The new arrangement with Aegis was never reduced to writing. It is common ground, however, that the terms of the arrangement were contained in a written agreement that the company had entered into with Aegis in 2006 together with variations contained in an email exchange between the parties on 30 September 2009. Under this arrangement the media organisations with whom Aegis placed business on the company’s behalf would render an invoice to Aegis for payment. Aegis would then create an invoice for the company to send to its clients. The new invoices contained Aegis’s logo and bank account number. Aegis would receive payment from the company’s clients directly and then account to the company for the balance outstanding under the invoices after deducting an agreed commission for the use of its accreditation facility.
[11] The company advised its clients of the arrangement with Aegis by letters sent in mid-October 2009. In a letter dated 30 November 2009, the company also advised customers that Aegis was acting as its agent. It instructed clients to pay future invoices to Aegis’s bank account number as shown on the invoices that they were to receive.
[12] On 30 November 2009, Aegis sent the invoices generated in respect of advertising placed during November to the company for forwarding to its clients. Most of these were due for payment on 20 December 2009. The company then sent Marac a list of those invoices in accordance with the arrangement that the company had with it. In December 2009 Marac learned that clients had been told to pay the November invoices to Aegis rather than Marac. At that point the company still owed Marac the sum of approximately $3 million. Not surprisingly, Marac became concerned at this development. It responded by contacting Ms Wynyard and then writing directly to the company’s clients instructing them to pay all invoices they received from the company to Marac.
[13] On 17 December 2009, Marac terminated its arrangement with the company. At the same time it served a demand requiring the company to pay the balance then outstanding under the financing facility agreement. This required the company to repay Marac the sum of approximately $2.42 million. Marac was eventually repaid in full on 5 January 2010. It then released its securities.
[14] Both parties appear to have proceeded to date on the basis that the contractual arrangement between Aegis and the company was sufficient to create an obligation on the company’s part to account to Aegis for all monies received in respect of invoices rendered after 1 November 2009. The Crown’s case in respect of all of the charges was based on the premise that the arrangement with Aegis superseded or took priority over any pre-existing obligations the company may have owed to Marac. As a result, Ms Wynyard was not entitled to cause the company to use monies received in respect of invoices rendered after 1 November 2009 to repay the debt owing to Marac. It is therefore necessary to consider whether that premise is correct. This obviously depends to a large extent on the nature of the company’s preexisting obligations to Marac.

The nature of the company’s pre-existing obligations to Marac

[15] The contractual arrangement between the company and Marac is contained in four documents. These comprise a letter of offer dated 27 November 2008, an Invoice Financing Facility Agreement (IFFA), a General Security Deed and a Specific Security Deed. The latter three documents are all dated 3 December 2008.
[16] The following provisions of the Specific Security Deed are relevant in the present context:

1.1 Definition: In this Deed, unless the context otherwise requires:

Contract means each Invoice (as defined under the Invoice Financing Facility Agreement) and each Accounts Receivable issued by the Debtor for its benefit;

Earnings means all monies payable to the Debtor during the currency of this Deed arising out of, or in connection with the Contract;

...

Secured Property means all present and future right, title and interest (legal and equitable) of the Debtor arising out of, or in connection with, the Contract or the Earnings, and all proceeds of that property.

...

1.2 Interpretation: In this Deed:

...

1.2.15 A security interest includes:

(a) A mortgage, pledge, charge, lien, hypothecation, encumbrance, deferred purchase, title retention, finance lease, contractual right of set-off, flawed asset arrangement, sale-and-repurchase and sale-and-leaseback, arrangement and other arrangement of any kind, the economic effect of which is to secure a creditor; and

(b) A “security interest” as defined in section 17(1)(a) of the PPSA in respect of which the relevant person is the debtor.

...

3.1 Security: To secure due payment of the Secured Indebtedness and compliance with the Secured Obligations, the Debtor grants to the Secured Party a security interest in the Secured Property.

3.3 Continuing Security: This Deed and each security interest created under this Deed:

3.3.1 is a continuing security, notwithstanding intermediate payments, settlement of accounts or anything else; and

3.3.2 is in addition to, and not to be merged in, any Collateral Security.

[17] The IFFA contained the following provisions:

• 1.1 Definition: In this Agreement, unless the context otherwise requires:

...

Current Account means an account maintained by and for the benefit of the Lender to which shall be debited or credited (as the case may be) all sums of money paid and all amounts charged to the Borrower by the Lender and to which all cash, deposits and proceeds in respect of all Debts paid by Debtors is collected;

...

Debt means the receivable represented by the amount owed to the Borrower by a Debtor under an invoice (prior to any transfer of it to the Lender) including any Approved Debt and Non-Approved Debt, any GST and all Related Rights;

...

Invoice means, in relation to a Debt, an invoice or other document evidencing a Debt issued by the Borrower to a Debtor from time to time in respect of that Debt and specifying the goods sold, and the amount, method, and terms of payment required to be made by the Debtor to the Borrower, and includes any electronic means of storing or conveying such information, and which is dated not more than 2 days prior to the date of this Agreement;

...

5.1 Security and transfer: To secure the due payment of the Outstanding Moneys and the observance and performance of the respective obligations of the Borrower under the Relevant Documents, the Borrower grants to the Lender a security interest in all the Debts and transfers to the Lender all its right, title and interest (present and future, legal and equitable) in and to all Debts which are in existence at the date of this Agreement or which come into existence at any time thereafter.

(emphasis added)

5.2 Collection obligations: Notwithstanding clause 5.1, the Borrower shall remain liable to perform all the obligations assumed by it in relation to it in relation to all the Debts and the Lender appoints the Borrower its collection agent for the collection and recovery of the Debts. Such agency may be revoked by the Lender at any time in its absolute discretion.

13.1 The Borrower undertakes to the Lender that, in respect of the Debts, it will:

...

13.1.4 direct all Debtors to make payments in respect of Invoices to the Current Account;

...

13.4.3 ensure that (except as otherwise agreed in writing) all proceeds of the Debts are paid without deduction or set-off to the Current Account (and all such moneys at any time held by the Borrower or any of its agents will be held on trust for the Lender;

[18] It may be arguable that, standing alone, the documents other than the IFFA did not require the company to account to Marac in respect of payments it received from its debtor clients. When Clause 5.1 of the IFFA is added to the mix, however, we consider the position to be different. Under that clause Marac became the beneficial owner of all of the company’s debts. In addition, the company undertook in Clauses 13.1.4 and 13.4.3 to ensure that its clients paid the amounts charged in invoices to Marac’s bank account without deduction or set-off. Clause 5.2, which created an agent/principal relationship in relation to collection obligations, further emphasised Marac’s ownership of the debts.
[19] We consider that these provisions clearly created an ongoing contractual obligation on the part of the company to account to Marac for all payments that clients made in respect of invoices rendered to its clients. More importantly for present purposes, Marac became the beneficial owner of all of the company’s debts as from the commencement of the arrangement. This gave Marac the right to receive funds paid by the company’s clients in reduction or extinguishment of those debts, and the company was required to, and did, direct its clients that payment of all invoices was to be made to Marac. This obligation remained in place notwithstanding the arrangement that Ms Wynyard subsequently committed the company to with Aegis.

Count 3 — causing loss by deception

[20] This count under s 240(1)(d) of the Crimes Act alleged that Ms Wynyard caused Aegis loss by deceiving it in relation to payments that clients were to make in respect of November billings.^[3] The Crown contended that Aegis understood it would receive the proceeds of all November billings, and Ms Wynyard regularly assured Aegis that this would be the case. She also gave Aegis updates regarding payments it could expect to receive from specified clients. She did so notwithstanding the fact that she knew that those clients had already made the payments in question to Marac’s account, or that this would occur in the future. In some cases Ms Wynyard intervened personally to ensure that payments went to Marac rather than Aegis. The Crown alleged that Ms Wynyard’s deceptive behaviour caused Aegis loss because it prevented Aegis from taking active steps to ensure that November billings were paid to it rather than to Marac.
[21] The Judge found that Ms Wynyard had acted deceptively in her dealings with Aegis, and she does not challenge that finding. Instead, she contends that the Judge was not entitled to conclude that her conduct had caused Aegis loss. The Judge dealt with this issue as follows:^[4]

[148] In so far as contacting clients was concerned I accept that Aegis only had a limited window of opportunity to do so but it seems reasonable to draw an inference that at least some of the client's monies could have been directed to Aegis rather than paid to Marac, and that would have reduced the loss overall for Aegis.

[149] I accept the position that many of the clients would have realised the true contractual position, namely they were clients of [the company] and not of Aegis and would have disregarded any attempt by Aegis to direct payment to them, especially when they were aware there was a competing entity and Ms Wynyard was directing them to pay that entity rather than Aegis. However other clients would have made up their own mind. An example of that is given in the evidence of Mr M P Nolan who, on behalf of Davies Foods (2006) Ltd directed a payment of $28,356.08 with respect to an invoice raised by [the company] in association with Aegis on 30 November, 2009, to Marac. The monies were paid to Marac’s bank account on 21 December, 2009 by Davies Foods following Marac’s letter of 14 December and Marac’s assertion that the invoice had been assigned to them. Mr Nolan had received the letter from [the company] dated 30 November, 2009, instructing him to pay the invoice to Aegis’s bank account and had also received a copy of Ms Wynyard’s letter to clients of 15 December, 2009, confirming that arrangement. Further, he had been phoned by an employee of [the company] instructing him to ignore Marac’s letter and pay the monies to Aegis. Notwithstanding that he chose to make the payment to Marac because he accepted a factoring agreement was in place and so he ignored [the company’s] instructions.

[150] Other clients also paid Marac, notwithstanding being instructed by [the company] to pay Aegis, as for instance Planet Fund which paid $179,396.34 for invoices rendered from 30 November, 2009 and 7 December, 2009, to Marac’s bank account on 30 December, 2009. It acted solely on Marac’s instructions as contained in its letter of 14 December, 2009.

[151] Consequently it is reasonable to assume that had Aegis known the full and true position, and in particular had it known of Ms Wynyard’s dealings with Restaurant Brands, an inference can be drawn that active intervention by Aegis with clients would have produced payments in the same way that Marac’s active intervention procured payments to itself without Ms Wynyard, in all instances, having to herself direct the client. I do not consider that to be speculative but simply a reasonable inference drawn from proved facts.

[152] Certainly not all of Aegis’s loss could have been prevented by the discovery of the true position that Ms Wynyard had been concealing from 16/17 December, 2009 onwards but some, and in a significant amount, may have been able to have been made, certainly more than $1,000.

[22] We agree with the Judge’s conclusion that Aegis may have acted differently if it had known the true position. The real issue, however, is whether Mrs Wynyard’s actions ultimately caused Aegis any loss.
[23] For the Crown, Mr La Hood submitted that it was open to the Judge to conclude that Aegis had suffered loss because Ms Wynyard’s conduct deprived it of the opportunity to contact clients directly in the way that Marac was doing. He also pointed out that Marac called up the outstanding advances under the provisions of the General Security Agreement rather than the Specific Security Agreement. Further, he contended that any payments made directly by clients to Aegis would not have come into the possession of the company and for that reason would not have been subject to Marac’s securities.
[24] We do not consider these submissions to be persuasive. We see no relevance in the fact that Marac chose to call up the advances under one agreement rather than the other. The important point is that Marac owned the debts from the outset by virtue of Clause 5.1 of the IFFA, and was therefore also the beneficial owner of any payments made by clients in respect of those debts.
[25] Mr La Hood also argued, relying on observations made by this Court in R v Morley and R v Cai, that the lack of opportunity to contact clients caused loss to Aegis because it diminished or impaired its position.^[5] As the Court noted in Morley, however, loss flowing from a deception is assessed by the extent to which the complainant’s position prior to the deception has been diminished or impaired.^[6] In the present case the terms of the Marac securities irretrievably compromised Aegis’s ability to gain access to payments made by the company’s debtors from the outset. We do not view Ms Wynyard’s deceptive conduct as materially impairing or diminishing that ability further.
[26] In order to prove this charge the Crown had to satisfy the Judge beyond reasonable doubt that Ms Wynyard’s deceptive conduct actually caused loss to Aegis. We view the Judge’s conclusions on this issue as being somewhat tentative. We say this because he said “it seems reasonable to draw an inference that at least some of the clients’ monies could have been directed to Aegis rather than paid to Marac, and that would have reduced the overall loss for Aegis”.^[7] The phrase “could have been directed” does not suggest a factual finding made to the criminal standard. Rather, it seems to be a finding that it was likely, or perhaps very likely, that Aegis would have suffered loss through the lack of opportunity to contact the company’s clients. That is not sufficient, however, to satisfy the requisite onus of proof.
[27] The reality is that between November 2009 and January 2010, the company placed advertising worth approximately $10 million through Aegis. Of this sum, the company’s clients paid approximately $2.2 million to Marac rather than Aegis. Some of these payments were made as a result of Marac contacting clients directly, whilst others were made as a result of Ms Wynyard’s efforts in diverting payments to Marac.
[28] Even if Aegis had had the same opportunity as Marac, we consider it to be reasonably possible, and in fact likely, that Marac would have been fully repaid in early January 2010 in any event. The company’s debtors owed a sufficiently large amount during this period to ensure that Marac’s efforts to recover its advances stood a reasonable chance of success. Even if Aegis had persuaded some clients to make payments to it rather than Marac, it is reasonably possible that Marac would still have been repaid in full from monies paid by other clients. The loss suffered by Aegis would therefore ultimately have been the same.
[29] For that reason we do not consider the Crown was able to establish beyond reasonable doubt that Aegis suffered any loss by reason of Ms Wynyard’s deceptive conduct. The appeal against conviction on this charge must therefore succeed.

Counts 5 to 10: Theft by a person in a special relationship

[30] Each of these charges was based on the fact that Ms Wynyard arranged for payment of invoices by clients to be made to Marac rather than Aegis. The Crown alleged that Ms Wynyard knew the company had a contractual obligation to account to Aegis for those funds, and she intentionally caused it to breach that obligation by arranging for payments to be made to Marac. The Crown contended that in doing so Ms Wynyard committed an offence under s 220(1)(a) of the Crimes Act.
[31] Section 220 relevantly provides as follows:

220. Theft by person in special relationship

(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—

(a) to account to any other person for the property, or for any proceeds arising from the property; or

...

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

...

[32] The Judge described the underlying intention of the arrangement with Aegis as follows:^[8]

[168] ... The whole point of the arrangement, as Ms Wynyard well knew, was that [Aegis] wanted to be sure it would not be left with liability for meeting advertising costs incurred on behalf of [the company’s] clients after accepting an instruction from [the company] to place advertisements and so wanted funds paid directly to it by the clients. She, therefore, well knew Aegis’ requirements and chose, by not directing [payments] to Aegis, once the monies were in hand, to breach the requirement.

[33] The Judge then found that in relation to each of the transactions referred to in Counts 5 to 10 Ms Wynyard had intentionally caused the company to pay Marac using funds that she knew should have been paid to Aegis. As a result, he found the charges proved beyond reasonable doubt.
[34] Mr Davison QC advised us that Ms Wynyard defended these charges primarily on the basis that she could not be convicted under s 220 because Marac had a prior claim to the payments as owner of the debts. The Judge did not deal with that argument in the reasons he gave for his verdicts. For that reason we need to consider it afresh.
[35] Ms Wynyard’s dilemma was that she had purported to commit the company to account to both Marac and Aegis in respect of the same funds. The issue is whether she can be criminally liable under s 220 for choosing to honour one of those obligations at the expense of the other.
[36] Ms Wynyard was undoubtedly the author of her own misfortune, because she ostensibly committed the company to account to Aegis in respect of funds received from invoices rendered after 1 November 2009 when she knew or ought to have known that Marac already owned those funds. It can therefore be argued that she should be responsible for the consequences that followed.
[37] Mr La Hood also relied in this context on the fact that Ms Wynyard had never purported to pay Marac rather than Aegis on the basis that Marac had a superior legal basis for its claim. Rather, she acknowledged when interviewed by the Serious Fraud Office that she wanted to do all that she could to prevent Marac from placing the company in liquidation. Repayment of the Marac advances would also extinguish the personal guarantee Ms Wynyard had given to Marac in respect of those advances. Mr La Hood submitted that the fact that she deliberately misled Aegis and failed to advise it of the true situation demonstrated that Ms Wynyard intentionally breached her obligation to account to Aegis in respect of the payments. Mr La Hood also contended that although a failure to pay Marac might have exposed Ms Wynyard and the company to civil liability, it would have no relevance in terms of a charge under s 220.
[38] We consider that the factors relied upon by Mr La Hood are relevant to the appeal in respect of Count 11, discussed later in this judgment.^[9] They do not provide an answer, however, to the question of whether Ms Wynyard could be guilty of an offence under s 220 when she caused the company to pay Marac at the expense of Aegis.
[39] As we have already observed, the effect of the contractual arrangement between Marac and the company was that Marac became the beneficial owner of all of the company’s present and future debts. This occurred well before Ms Wynyard committed the company to the arrangement with Aegis. Although we have not heard argument on the point, the parties may therefore have proceeded on an erroneous basis in assuming that the company’s contractual relationship with Aegis required it to account to Aegis for payments received in respect of the company’s debts.
[40] We have concluded that although Ms Wynyard was far from frank in her dealings with Aegis, she cannot be criminally liable for actions that resulted in money being paid to Marac. Marac was the beneficial owner of the money paid by the company’s clients, and, as it was entitled to do, it had given the clients notice requiring them to make payments directly to it. It follows that Ms Wynyard could not be convicted of an offence under s 220 for ensuring that the company used payments from debtors to repay Marac rather than Aegis. In short, she could not be criminally responsible for complying with the company’s legal obligation to account to the creditor who undoubtedly had the superior right to the funds. The appeal in respect of Counts 5 to 10 must therefore succeed.

Count 11: Dishonestly using a document to obtain a pecuniary advantage

[41] This charge related to a cheque for $99,836.32 that was drawn by one of the company’s clients, AFT Pharmaceuticals Ltd (AFT), and originally made payable to Aegis.^[10] The cheque related to six invoices rendered by the company to AFT on 30 November 2009. It was therefore ostensibly subject to the arrangement the company had entered into with Aegis, although equitable ownership of the debt rested with Marac.
[42] After Ms Wynyard received the cheque she contacted Mr Hartley Atkinson, one of AFT’s directors, and asked him to change the payee of the cheque so that the payee was the company rather than Aegis. Mr Atkinson then arranged for Ms Wynyard to meet with his wife, who was a signatory in respect of AFT’s bank account. Mrs Atkinson altered and initialled the cheque in accordance with Ms Wynyard’s request. Ms Wynyard then paid the cheque into Marac’s bank account in reduction of the debt then owing to it.
[43] The charge was laid under s 228(1)(b) of the Crimes Act, which provides:

228. Dishonestly taking or using document

(1) Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,—

...

(b) dishonestly and without claim of right, uses or attempts to use any document.

[44] Section 217 of the Crimes Act defines “dishonestly” in this context as follows:

dishonestly, in relation to an act or omission, means done or omitted without a belief that there was express or implied consent to, or authority for, the act or omission from a person entitled to give such consent or authority.

[45] In Hayes v R, the Supreme Court held that the fact that the defendant is legally entitled to a pecuniary advantage obtained by dishonest conduct will be no defence to a charge laid under s 228.^[11] In this context the Court said:

... The statutory purpose is to criminalise the use of dishonest means directed to gaining the advantage even if the accused is otherwise entitled to it. Questions of actual entitlement may well be relevant to sentence, but they are not relevant to guilt, save that a belief in entitlement will, of course, be relevant to mens rea.

[46] Claim of right in this context has the meaning attributed to it by s 2 of the Crimes Act.^[12] This provides:

claim of right, 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 of any matter of law other than the enactment against which the offence is alleged to have been committed.

[47] In Hayes, the Supreme Court observed that a qualifying belief does not have to be reasonable or based on reasonable grounds.^[13] Nor does it have to be honest, though it must be genuinely held. In this context a belief is a belief.
[48] Unlike a charge under s 220, the focus in a charge under s 228 is not on the end result of the transaction in question. Rather, it is on the use of a document accompanied by a particular state of mind. In the present case the Crown contended that Ms Wynyard acted dishonestly and without claim of right in using the cheque to pay Marac because she knew she did not have the consent of either AFT or Aegis to use the cheque in that way and she did not genuinely believe she had a legal right to do so.
[49] The Judge accepted that Ms Wynyard did not act dishonestly merely by asking AFT to alter the payee of the cheque. He found she was entitled to take that step because AFT was not in a contractual relationship with Aegis. Rather, it owed the debt to the company. Ms Wynyard was therefore entitled to ask AFT to make payment to the company rather than Aegis.^[14]
[50] The Judge then observed:^[15]

[201] However, the fact that Ms Wynyard was able to procure the change of payee involved dishonesty on her part as she was well aware of the arrangement reached with Aegis, to which she had agreed, and knew that by requesting AFT to alter the cheque she was breaching that arrangement. That is what the accused knew the circumstances to be at the time. She misled Ms Atkinson as to the reason for the need to change the payee and so the element of dishonestly using the cheque in the way she did is made out.

[202] The other defence is that the accused had a claim of right, namely a belief the act was lawful even though the belief may have been based on ignorance or mistake of act or law. On behalf of the accused it was submitted that the defence was available as she believed, by then, that Marac had a charge over the monies, as they did, and she was obliged to pay the monies to them. That, however, was not how she described the situation to the Serious Fraud Office investigators saying that, although ultimately it was her intention to repay the money to [Aegis], she was simply doing whatever she could do to discharge [the company’s] liability to Marac and “stop them bringing in their liquidator” and further, it is at odds with the evidence of Mr Quarterman [the company’s Group Business Manager], which I accept, that when she initially explained her scheme for paying Marac some of the monies due to Aegis, and he told her that she could not do so, she insisted that she would do because the survival of her company was at issue. She did not assert her actions were lawful and I am satisfied she did not believe they were.

[203] Consequently in having the cheque altered and in diverting the money from Aegis, I am satisfied, as I am with the other counts in the same sequence of charges, that there is no claim of right defence because she was aware of the obligations she had entered into with Aegis and failed to notify Mr Johnson [Aegis’s Chief Financial Officer] of her intention to pay the monies to Marac, or in the context of count 11 have the cheque paid to [the company] rather than Aegis. She had sent Mr Johnson a schedule of payments on 22 December, 2009 showing how payments were to be apportioned but there was no notification as to the intended payee with respect to the [AFT] payment.

[204] She never told Mr Johnson of her intention to pay any of the monies to Marac as she believed she was now lawfully obliged to do so. Instead she embarked on a course of deceiving him while she got rid of the indebtedness to Marac. Had she thought that she had a claim of right to act in the way she did from 17 December, 2009 onwards she would have informed Mr Johnson of her intentions. Her action in concealing from Aegis her true intention from this time onwards are hardly consistent with any belief that what she was doing was lawful. There was no evidence that she had taken legal advice. Her actions are consistent with simply assuaging the most pressing creditor with monies promised to another so as to prevent a receivership. ‘Robbing Peter to pay Paul’ without a genuine belief that it was lawful cannot found a claim of right defence.

[51] Mr Davison submits that the Judge erred in reaching these conclusions because he failed to have regard to the fact that as the owner of the debt, Marac had a prior claim to the payment forming the basis of the charge.
[52] We accept Mr Davison’s submission that, standing alone, the manner in which Ms Wynyard arranged for AFT to alter the payee of the cheque could not give rise to liability under s 228. The “use” of the cheque in this context must relate to the manner in which the company dealt with the cheque in its final form rather than the circumstances in which AFT drew it up. The real issue is therefore whether Ms Wynyard acted dishonestly and without claim of right in using the cheque to pay Marac rather than Aegis.
[53] The company had sent a letter to AFT in mid-October 2009 advising it that Aegis would be acting as its accredited agent as from 1 November 2009. The November invoices also instructed AFT to make payment to Aegis. That was no doubt why AFT originally made out the cheque in favour of Aegis rather than the company. Ms Wynyard clearly believed both that the cheque formed part of the arrangement with Aegis and, as a result of her discussions with Mr Quarterman, that the company should use the cheque to pay Aegis and not Marac. She never sought to justify the payment to Marac on the basis that it owned the AFT debt or held a prior ranking security. It is unlikely that she ever turned her mind to those issues. Rather, she decided to take whatever steps were necessary to stop Marac placing the company in liquidation.
[54] Furthermore, Ms Wynyard could not have believed that Aegis had authorised or consented to the cheque being used to pay Marac. Rather, she knew that Aegis would not consent to the cheque being used for that purpose. Notwithstanding these factors she used the cheque to pay Marac after having deliberately misled Aegis as to what she intended to do. Although the ultimate effect of her actions was to honour the company’s primary obligation to Marac, we consider that the manner in which she used the cheque was nevertheless dishonest and without claim of right in terms of s 228. It did not matter that in law the company was required to pay the money to Marac rather than Aegis.
[55] The appeal against conviction on Count 11 fails as a result.

The appeal against sentence

[56] The Judge took an overall starting point of two years imprisonment and applied a deduction of three months to reflect Ms Wynyard’s previous good character. He then converted the resulting sentence of 21 months imprisonment to concurrent sentences of eight months home detention on all charges other than Count 3. He imposed a concurrent sentence of four months home detention on Count 3.
[57] The sentences imposed on Counts 3 and 5 to 10 will need to be quashed. Ms Wynyard has not appealed against conviction on Counts 1, 12 and 13. The sentences imposed on those charges will need to be reconsidered in light of this Court’s decision.

Result

[58] The appeal against conviction is allowed in respect of Counts 3 and 5 to 10. Those convictions are set aside and the sentences imposed in respect of them are quashed.
[59] The appeal against conviction in respect of Count 11 is dismissed.
[60] Counsel for the Crown is to file a memorandum within seven days of delivery of this judgment setting out the Crown’s position regarding the appropriate sentence to be imposed in respect of the charges on which Ms Wynyard remains convicted. Counsel for Ms Wynyard is to file a memorandum in response within seven days of receipt of the Crown’s memorandum. We will then issue a final judgment dealing with the issue of sentence.
[61] Ms Wynyard has to date been on bail granted by this Court on 4 November 2015. We extend the grant of bail on existing terms until delivery of the final judgment of the Court.

Solicitors:
Crown Solicitor, Wellington for Respondent

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^[1] R v Wynyard DC Auckland CRI 2013-004-6021, 27 March 2015 [Reasons for verdicts].

^[2] R v Wynyard [2015] NZDC 7240 [Sentencing notes].

^[3] Crimes Act 1961, s 240(1)(d).

^[4] R v Wynyard, above n 1.

^[5] R v Morley [2009] NZCA 618, [2010] 2 NZLR 608 at [46]; Cai v R [2011] NZCA 604 at [13].

^[6] At [46].

^[7] R v Wynyard [Reasons for verdicts], above n 1, at [148] set out above at [21].

^[8] R v Wynyard, above n 1.

^[9] At [41]–[55].

^[10] The same cheque was also the subject of Count 9 (theft by a person in a special relationship).

^[11] Hayes v R [2008] NZSC 3, [2008] 2 NZLR 321 at [12].

^[12] Hayes v R, above n 11, at [35].

^[13] At [35].

^[14] R v Wynyard above n 1 at [200].

^[15] R v Wynyard, above n 1.