R v Rowley [2012] NZHC 1778 (20 July 2012)

Last Updated: 24 July 2012

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CRI 2010-085-006205 [2012] NZHC 1778

THE QUEEN

v

DAVID INGRAM ROWLEY BARRIE JAMES SKINNER

Hearing: 30 April,1-4, 7-11, 14-18, 21-25, 28-31 May, 1, 5-8, 11, 13-15, 18-20

June 2012

Counsel: D R La Hood with M J Ferrier and A Instone for Crown

M T Lennard with M R Keating (15-18 May) for Accused

Verdicts: 20 July 2012

_{REASONS FOR VERDICTS OF THE HON JUSTICE KÓS}

Note: A schedule of the verdicts returned appears at the end of these written reasons. A summary of reasons is also given, beginning at [459] below.

Index

A. Introduction .....................................................................................................[1] Charges...................................................................................................................[1] Verdicts ..................................................................................................................[7] Judge-alone trial .....................................................................................................[8] Crown case – outline ............................................................................................[18] Defence case – outline .........................................................................................[30] B. Dishonest Use – Background and Legal Elements .....................................[39] Background ..........................................................................................................[39] Legal elements .....................................................................................................[41] C. Dishonest Use – Earlier Period Clients .......................................................[50] Introduction ..........................................................................................................[50] Kathy Ertel – tax and GST returns – counts 1 & 2 ..............................................[52] Jamie Wilson – tax and GST returns – counts 3 & 4 ...........................................[89]

R v ROWLEY & SKINNER HC WN CRI 2010-085-006205 [20 July 2012]

Harding Electrical Limited – tax and GST returns – counts 5 to 12 ..................[104] Country Theme Franchise Limited – tax and GST returns – counts 30 to 32 ...[134] Esk Contractors Limited – tax and GST returns – counts 14 to 19....................[152] Esk Group Limited – tax and GST returns – counts 20 to 29 ............................[152] Pipitea Street Developments Limited – tax returns – counts 33 to 34 ...............[180] Lorraine Skiffington – tax returns – counts 35 to 38 .........................................[180] Strategic Directionz Limited – tax and GST returns – counts 81 to 84 .............[180] Sharon Skinner – tax returns – counts 65 to 69 .................................................[211] Leyser Enterprises Limited – tax returns – counts 39 to 40...............................[222] Sharpay Holdings Limited – tax returns – counts 41 to 42 ................................[234] Nigel Hall Decorators Limited – tax and GST returns – counts 43 to 45 ..........[252] Overall evaluation of period up to June 2007 ....................................................[265] D. Dishonest Use – Later Period Clients ........................................................[269] Topline Tailors Limited – tax and GST returns – counts 49 to 52 ....................[270] Mangiare Foods Limited – tax and GST returns – counts 75 to 77 ...................[270] AAA Finance Limited – tax returns – counts 53 to 55 ......................................[284] Sunshine State Finance Limited – tax returns – counts 63 and 64.....................[284] SS Transport Limited – tax returns – counts 56 & 57........................................[293] Vicki Breen – tax returns – counts 58 to 61 .......................................................[300] MQ Property Services Limited – tax return – count 62 .....................................[307] Scotty’s Construction Limited – tax returns – counts 70 to 74 ..........................[317] Steven Godfrey – tax returns – counts 78 to 80 .................................................[329] Quik’n’Tuff Holdings Limited – GST returns – count 85 .................................[341] BRMVR Holdings Limited – GST returns – counts 86 to 87 ............................[350] Conaghan Consulting Limited – tax and GST returns – counts 88 to 90 ..........[360] Kilbirnie Plymouth Investments Limited – GST returns – count 91 .................[374] AGI Motor Sport Limited – tax and GST returns – counts 92 to 93 .................[382] E. Perversion of Course of Justice ..................................................................[394] Legal elements ...................................................................................................[395] Overarching considerations................................................................................[402] Aaron Gotlieb - count 94....................................................................................[413] Lorraine Skiffington - count 95..........................................................................[416] Stefan Sirota - count 96 ......................................................................................[419] Steven Godfrey - count 97 .................................................................................[422] Douglas Leyser - count 98 .................................................................................[425] Scott Feasey - count 99 ......................................................................................[428] Aashish Patel - count 100...................................................................................[431] F. Knowing Provision of False Information ..................................................[434] Section 347 application ......................................................................................[435] Legal elements ...................................................................................................[437] Crown case .........................................................................................................[438] Defence case.......................................................................................................[443] Analysis ..............................................................................................................[447] G. Conclusion and Summary of Reasons .......................................................[458] Schedule: Verdicts returned....................................................................................

A. INTRODUCTION Charges

Dishonest use

[1] The accused, Barrie James Skinner and David Ingram Rowley, are charged with 89 counts of using a document dishonestly to obtain a pecuniary advantage, under s 228(b) of the Crimes Act 1961. The accused were accountants and tax agents. The documents said to have been used dishonestly are clients’ GST and income tax returns. The Crown says the accused devised a scheme to issue false invoices, which they supplied to their clients. That enabled the clients to claim the invoice payments as deductible expenses in their income tax returns, and to claim input credits in GST returns. The benefit gained by clients is part of the alleged unlawful pecuniary advantage. But the accused are alleged to have benefited personally too. Evidence showed that around two-thirds of the invoice payment was returned to clients. The balance was retained to the accused’s practice, Tax Planning Services Limited (TPS). Much of that was then disbursed to the accused personally. There is however an argument as to the legal basis on which they received that money.

[2] The Crown says that fictitious invoices total in excess of $9,500,000. The resultant shortfall to the Revenue (i.e. benefit to clients) was the order of $3,100,000. Most of that has been retrieved as a result of clients’ voluntary disclosure and reversal of deductions and GST inputs claimed. The personal benefit to the accused is said to exceed $2,300,000.

Perverting the course of justice

[3] In addition the accused face, jointly, seven counts of wilfully attempting to pervert the course of justice, laid pursuant to ss 117(e) and 66 of the Crimes Act

1961. These charges relate to meetings with, and documents given to, clients in advance of compulsory interviews those clients were to attend with the Revenue under s 19 of the Tax Administration Act 1994 (TAA).

Knowing provision of false information

[4] Finally, each accused faces five individual counts of knowingly providing false information to the Commissioner, laid pursuant to s 143B(1)(c) and (f) of the TAA. These charges relate to the personal tax returns of each accused.

Counts discharged

[5] During the course of trial, at the Crown’s application and by consent, four

counts (counts 13, 46, 47 and 48) were discharged.

Counts amended

[6] Without opposition five counts concerning the tax affairs of Mr Skinner’s

sister, Sharon Skinner, were amended during trial.1

Verdicts

[7] Annexed at the end of these reasons is a schedule of the verdicts returned this morning. That schedule is cross-referenced to the relevant paragraphs within these written reasons.

Judge-alone trial

2011 ruling

[8] This is a Judge-alone trial. That is a consequence of an order made by me last November. The Crown had applied for that order under s 361D of the Crimes

1 Counts 65–69.

Act. In my judgment2 I noted that the trial was likely to take four to six weeks, with

48 Crown witnesses and some 45 lever arch files of exhibits. Given the expected duration of trial, the number and nature of charges and issues, the volume of evidence and the likely imposition on jurors (my conclusion being that some would cope but it was very likely that a number would simply become almost inextricably lost in the detail, thereby creating a greater imposition on those jurors who did cope) I ruled that the trial take place on a Judge-alone basis.3

[9] As this is a Judge-alone trial, it is proper that I remind myself of the following matters on which I would have directed a jury. It is important that I too bear them in mind.

Presumption of innocence

[10] The first of these is that the starting point is a presumption of innocence. The Crown, and the Crown alone, must prove the accused are guilty beyond reasonable doubt. The Crown must prove each element of each count against the accused beyond reasonable doubt before I may enter a verdict of guilty on that count.

Burden of proof

[11] Proof beyond reasonable doubt is a very high standard to meet. I must be sure the accused is guilty. If I have an honest and reasonable uncertainty left in my mind about the guilt of the accused on a count, after thorough and impartial consideration given to all the evidence, I must enter a verdict of not guilty on that count.

[12] The Crown is not bound to prove each factual contention beyond reasonable doubt. But it must prove each formal element of the charge to that standard. This Court, as with any jury, is entitled to draw inferences from individual parts of the evidence. Those individual items of evidence need not be proved to any particular standard. It is the cumulative weight that must prove the elements to the required

_{standard of beyond reasonable doubt. As the Court of Appeal has said in R v}

2 _{R v Rowley & Skinner (No 2) HC Wellington CRI 2010-085-6205, 11 November 2011.}

3 Ultimately the trial took 6½ weeks and involved some 60 folders of exhibits.

Thomas,4 a series of coincidences which might on their own prove little may cumulatively carry significant weight.

Lies

[13] Where I consider that an accused has lied, that is something I may take into account like other evidence. I remind myself that it is important not to think that just because an accused may have lied on some point or other, he is necessarily guilty of any or all charges before the Court. People lie for reasons other than because they are guilty. It is for me to assess the weight I place on the lie. The fact that an accused has lied is just one piece of evidence to consider in deciding whether the Crown has proved the relevant element of each charge against the accused beyond reasonable doubt.

[14] Having said that, and as will become apparent through the course of the reasons that follow, I regret to say that I find that each accused lied repeatedly in the course of giving evidence before me. Where I have rejected explanations given in evidence by the accused, I say so in the context of each count.

Co-accused: Mr Stevens

[15] In thirteen counts in the indictment5 the accused are charged on the basis that they acted together also with a Mr Shaan Stevens. Mr Stevens is a former chartered accountant and principal of Guinness Gallagher Accounting Limited. The charges relate to former clients of Mr Stevens, referred by him to the accused on the basis that they would participate in the alleged fraudulent scheme. In the case of those counts, the returns were filed by Mr Stevens on behalf of his clients. The accused are said to have supplied the false invoices and handled payments thereof. Mr Stevens is said to have received cash from the accused totalling $8,500 for his assistance.

[16] Mr Stevens pleaded guilty to those charges (and others) following a pre- committal sentence indication. He was sentenced in the Wellington District Court

4 _{R v Thomas [1972] NZLR 34 (CA).}

5 Being counts 1, 2, 33, 34, 58, 59, 60, 61, 88, 89, 90, 92 and 93.

by Judge Barry on 7 November 2011 to ten months’ home detention and 150 hours’

community work. He was also ordered to pay reparation of $121,852.

[17] Mr Stevens gave evidence for the Crown. I will have more to say about that evidence, and Mr Stevens’ credibility, later.6 However for present purposes Mr Stevens’ guilty pleas are irrelevant to the position of the accused in this trial. I disregard them accordingly.

Crown case – outline

[18] The Crown says that the accused defrauded the Revenue by involvement in a false invoice writing scheme. The Crown alleges that over a five year period the accused issued a number of false invoices to 27 clients. The invoices were typically (although not always) expressed to relate to “consultancy” or “sub-contracting” work. There were a number of different invoicing entities:

_{Corporate Entity Director Shareholder}

Momentum Consulting Kinetics Ltd (formerly, until May 2008 MCK Holdings Ltd)

Miize Madondo Miize Madondo

Sunshine Group Investments Limited (formerly He & She Limited)

Miize Madondo (until 15
February 2010)

Miize Madondo (until 15
February 2010)

Case Marlow Limited (formerly Showcase Limited)

Kam Chai Law Waikari Kohine Ltd (for Patero Trust. Peter Uren?)

Merc Trading Limited (formerly Mercer Trading Co Limited)

Frank Newman (until 29
May 2006), thereafter Barrie
Skinner

Frank Newman for
Mercer Trust

P & L Sharp Limited Barrie Skinner Barrie Skinner

_{MMBD Limited Barrie Skinner Skinner & Rowley Trusts}

Urban Consultants

_Limited

Barrie Skinner Skinner & Rowley Trusts

Trust Entity Trustee Beneficiaries Marsden No 2 Trust Peter Uren Peter Uren & others High Street Trust ? Kevin Armstrong

6 At [60]–[63].

[19] The Crown says that the accused’s accounting practice, TPS was, at one time

or another, the registered tax agent for each of those entities.

[20] In addition to the invoicing entities, other companies and trusts assume some importance in the course of the case. The more important are these:

_{Corporate Entity Director Shareholder}

Kilbirnie Plymouth

Investments Ltd

Barrie Skinner & David
Rowley

Barrie Skinner & David Rowley for (Kilbirnie Plymouth Trust?)

Waikari Kohine Ltd Kam Chai Law

(from May 2006)

Kam Chai Law (for Patero Trust? Peter Uren?)

_{Trust Entity Trustee Beneficiaries}

Kilbirnie Plymouth

Trust

Barrie Skinner, David
Rowley & Peter Uren

Accused discretionary beneficiaries; Peter Uren final beneficiary

Mercer Trust Frank Newman Kilbirnie Plymouth Trust final beneficiary

Patero Trust Waikari Kohine Ltd ? Various discretionary; Kilbirnie Plymouth Trust final beneficiary?

[21] In their distinct capacity as tax agents for the majority of the clients concerned, the accused are then said to have procured claims for invoice payments as deductible expenses in income tax returns, and as input credits in GST returns. The Crown says the invoices were false, and relate to services (or goods) never provided

- and never intended to be provided. Even where the accused were not a client’s tax agent, the Crown says that the filing of the returns was the intended and natural outcome of the invoice and payment system orchestrated by the accused.

Typical case

[22] Typically, the alleged offending is said to have been achieved in this way: a client with tax to pay was identified by the accused. The accused would explain that they could assist by entering into a transaction which would reduce the client’s indebtedness to the Revenue. The client would be assured that the transaction was a legitimate method of tax reduction. In some cases clients were told they were purchasing a tax loss from another business. An invoice was supplied to the client, but for goods and services never provided, and never intended to be provided. The client then paid the face value of the invoice into an account held or controlled by the

accused, usually the TPS trust account. On the same day (or within the next 48 hours) a large portion of the payment was transferred back to the client by the accused. Typically the amount was some two-thirds the original payment. The remaining one-third or so retained in the TPS trust account would then be distributed, usually to an account in one of the accused’s names, or to an associated trust or company.

[23] The full value of the invoice was then claimed by clients for income tax and GST purposes. The payment of the invoice was typically coded in the client’s accounts as “sub-contracting” or “(project) consultancy”.

[24] The scheme benefited clients of TPS because the combined effect of the income tax deduction and GST input credit exceeded the amount that the accused retained.

[25] The following example was given in opening by the Crown. It involves a client called Kathy Ertel.

[26] One of the transactions underlying counts 1 and 2 is a typical example of the alleged fraud. The key elements of the scheme can be illustrated diagrammatically, as follows:

_{1. MTCL issues invoice to Ertel in amount of $56,610}

_MTCL

_{Kathy Ertel}

_{3. Receives back $37,700 2. Pays $56,610}

TPS trust

_Account

5. Returns filed claiming GST credits and income tax deductions

GST credit $6,290

_{Income tax $16,605}

4. Retained amount distributed to accused

Received back from

_TPS

$37,700

Accused Skinner $7,500
Accused Rowley $2,500

_{Less original payment ($56,610)}

_{Left in TPS trust account $8,910}

_{Benefit (Ertel) $3,985}

_{Benefit (Accused) $18,910}

In summary:

(a) Kathy Ertel was issued with an invoice by “Mercer Trading Company Limited”

dated 31 January 2005 in the amount of $56,610 (GST inclusive);

(b) She paid the face value of that invoices into the TPS trust account on

9 September 2005;

(c) Shortly after the payment, she received a distribution back from TPS in the amount of $37,700;

(d) The retained amount ($18,910) was distributed between the accused (Skinner -

$7,500 and Rowley - $2,500), with the remainder left in the TPS trust account

($8,910);

(e) A GST return for the period ending 30 November 2005 was filed on or about 14

December 2005, claiming an input credit in the amount of $6,290 for the GST

component of that invoice;

(f) A income tax return was filed on or about 3 January 2007, claiming the face value of the invoice (56,610) as deductible expense, reducing her income tax bill by $16,605.

(g) Ms Ertel received the benefit of $3,985, which equates to the combined total of the GST input credits and income tax deductions, less the amount retained in by the accused (($6,290 + $16,605)) - $18,910)).

(h) The total loss to the Revenue, as a result of the transactions, was $22,895 ($6,290 GST + $16,605 income tax). This equates to the combined benefit to the accused and their client ($3,985 + $19,910).

(i) Conspicuous by its absence is the flow of any funds from the TPS trust account to the invoice issuing entity, Mercer Trading Company Limited.

[27] That is the Crown’s version. The defence offer a different explanation of this sample transaction, as I note at [33].

[28] While most of the invoices related to sub-contracting or consultancy work, other codes were management fees, loan procurement fees and the supply of electrical goods (in the case of a client in that line of work). On other occasions:

(a) clients were asked to make a payment, but without the issue of an invoice;

(b) clients made payment of the invoice in two or three tranches (with the intervening return of the refund portion funding each subsequent payment);

(c) in some instances only the refund portion was actually paid, rather than the full face value.

[29] The Crown says all this was “simply a false invoice-writing scheme; a

‘merry-go-round’ with the chief objective of defrauding the Revenue.”

Defence case – outline

[30] The accused put the Crown to the proof on the using document charges (being counts 1 to 93). They submit that the Crown must show, beyond reasonable doubt:

(a) that there was no genuine transaction – and that the accused knew that; or

(b) that the tax effect of the transaction was not as claimed – and the accused knew that; and

(c) (in either case) that the accused was knowingly involved in the filing of the relevant returns.

[31] The accused say in respect of some counts (1, 2, 33 to 36, 58 to 63 and 88 to

93) the clients were Mr Stevens, and not theirs. They say there is no evidence that they had knowledge of what Mr Stevens told his clients, what tax position he advised them to take, and what position they took. In the case of any in which they did have involvement, they did not believe that false tax returns would be filed.

[32] In respect of the other charges, they say there were real transactions which they believed generated the tax effects reflected in the relevant returns.

[33] As to the Ertel transactions described at [26] above, the defence offers a very different explanation. It says that Ms Ertel paid the $56,610 as part-payment for licensed carparks to be built at the St George Hotel site in Wellington. That sum was paid into the TPS trust account. Some $37,700 was repaid to her by way of “distribution/loan under a trust of which she was a beneficiary”. This entitled her to hold those funds until title passed, when she was obliged to return it. In exchange for all this she received entitlement to a 15 year licence for carparks. It is said that the transaction gave rise to a genuine input credit for GST purposes and a genuine income tax deduction. The net cash flow benefit to her was some $3,985. On the other side of the ledger, the balance of $18,910 was retained in the TPS trust

account, credited to the Kilbirnie Plymouth Trust7 which was the intended owner of

the land on which the carpark would be sited. Mercer Trading Company Limited (Mercer Trading), said to be head contractor for the carpark project, would return a GST output of $6,290 and income tax of $16,605. This too may be depicted

_{diagrammatically:}

7 The ultimate beneficiary of which was said to be Mr Peter Uren.

_MTCL

1. MTCL issues invoice to Ertel in amount of $56,610

3. Ertel receives $37,700 by way of distribution/loan under trust of which she was a beneficiary. Entitled to hold until title passed. Receives entitlement to 15 year licence for carparks

Kathy Ertel

TPS trust

_Account

2. MTCL pays $56,610 as part (half of licence for carparks to be built at St George Hotel site (Boulcott/Willis St)

5. Ertel returns filed claiming GST credits and income tax deductions GST credit $6,290

Income tax $16,605

Loan back $37,700

Less original

Payment $56,610

Cashflow Benefit $3,985

_{Plus eventual Licence for carpark}

4. MTCL retained amounts distributed via Accused/TPS trust account to Kilbirnie Plymouth Trust (intended owner of land on which carpark would be sited) on account of (head contractor for carpark licences)

6. MTCL returns
GST output Dec 05 $6,290
Income Tax Mar 06$16,605

[34] The accused say that to the extent they received personal benefits from invoices rendered by Mercer Trading or Case Marlow Limited (Case Marlow), those payments are properly to be regarded as repayment to them of advances made by them personally to Kilbirnie Plymouth Investments Limited (KPIL). That company is beneficially owned by Kilbirnie Plymouth Trust. Certainly there is evidence that substantial advances were made by the accused and their trusts to KPIL. The defence argument is that as payments were received in the TPS trust account on account of Mercer Trading and Case Marlow (entities ultimately owned beneficially by the Kilbirnie Plymouth Trust), payments were made direct to the accused in reduction of KPIL’s indebtedness to the accused and their trusts.

[35] In the case of payments received by the TPS trust account for Momentum

Consulting Kinetics Limited (MCK) and He & She Limited (entities associated with

Ms Miize Madondo)8 the accused say that some $1.55 million was paid to Ms Madondo. A variety of mechanisms were used, including payments by cash transfer and payments into bank accounts. They say these were payments they were obliged to make because moneys were genuinely payable to Ms Madondo pursuant to the MCK and He & She invoices.

[36] On counts 94 to 100 (attempting to pervert the course of justice) they submit that the Crown must show:

(a) the accused knowingly supplied false information to their clients;

(b) they did so with the intention that that information would be used in the course of the Revenue investigation (which, Mr Lennard conceded at the outset of trial was a “fairly available inference”); and

(c) that their purpose was to deflect the Revenue from prosecuting a criminal offence or adducing evidence as to true facts and thereby avoid a Crown prosecution.

[37] The accused’s case on these counts is that their clients were summoned by the Revenue to attend compulsory interviews under s 19 of the TAA, and to produce all relevant documents in their custody and control. The clients asked their accountants (including the accused) for documents in the course of responding to that requirement. They say they supplied the clients with the documents “and with an explanation as to how the transaction in question worked so as to enable their clients to comply with their obligations under s 19”. The accused say they believe the information they supplied was correct. They say they had no apprehension at the relevant time that criminal charges were a possibility. And they say that their actions were therefore not influenced or motivated by that consideration. Otherwise they put

_{the Crown to proof.}

8 See at [159].

[38] Finally, on counts 101 to 110 (filing false personal tax returns) they submit that their personal tax returns were, to the best of their knowledge at the time of filing, correct.

B. DISHONEST USE – BACKGROUND AND LEGAL ELEMENTS

Background

[39] Counts 1 to 93 are laid under s 228(b) of the Crimes Act 1961. It provides:

228 Dishonestly taking or using document

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,—

(a) ...

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

[40] There are three essential elements for the Crown to prove on each count:

(a) the accused used a document (the indictment pleads that the relevant documents are the income tax and GST returns filed by the clients);

(b) they intended to obtain (and retain) a pecuniary advantage; (c) they did so dishonestly and without claim of right.

Legal Elements

(1) Accused “used a document”:

[41] The documents the accused are charged with “using” are the various income tax and GST returns that were calculated by reference to the invoices issued to, and payments made by, clients. There is scant evidence that the accused directly prepared or filed these returns. Some indeed were prepared and filed by the clients

themselves, or by other accountants (including Mr Stevens). Despite that fact, there was no controversy and argument about this element of the charges.

[42] The document in the Act means “a document in any form”.9 The defence accepted the filing of returns by clients or other agencies as innocent agents will amount to “use” by the accused if they procured that event. As the Court of Appeal said in R v Thompson10:

The actus reus used by the accused of the document. Such use need not be by the accused in person: R v Paterson where this Court confirmed that where an offender deliberately uses its agent to perform the actus reus of the crime the offender will generally be treated as principal in terms of s 66(1)(a) of the Crimes Act.

[43] The Court of Appeal also said, in R v Gunthorpe:11

It was not disputed that a person may “use” a document without directly handling it (cf R v Paterson [1976] 2 NZLR 394). An instruction or direction to deal with the document in a particular way will suffice. Counsel submitted that nothing less than that will do. This is too narrow an approach. An instruction to carry out a particular transaction necessarily carries with it an instruction to do what is normally and reasonably necessary for the purpose. That was the Judge’s approach. He concluded that it was “inconceivable” that the whole transaction would have taken place without express instructions from Mr Hawkins. He spoke in terms of Mr Curtayne giving the immediate directions to the accounting staff concerning the cheques and the journal entries. The evidence did not go quite as far as that, and there was certainly none that Mr Hawkins had first instructed Mr Curtayne. There was evidence that Mr Curtayne frequently acted on Mr Hawkins’ behalf, but none that he had done so on this occasion. Nonetheless, for the reasons that follow, we consider the Judge entitled to draw the inference that, whoever was the intermediary, the instruction to effect the transaction must have come from Mr Hawkins.

[44] As the Court of Appeal has said in R v Ngamu,12 “use” is an “elastic term”. A proximate case to the present one is Down v R.13 In that case the accused was charged with dishonest use of documents (invoices) with intent to obtain a pecuniary advantage. She was convicted, and appealed to the Court of Appeal. The evidence

showed that Ms Down had not helped create the invoices, and nor had she handled

_{them. As a director she had, however, signed loan applications to purchase business}

9 _{Crimes Act 1961 s 217.}

10 _{R v Thompson [2005] 3 NZLR 577 at [12].}

11 _{R v Gunthorpe [2003] 2 NZLR 433 at [134].}

12 _{R v Ngamu [2010] NZCA 256, [2010] 3 NZLR 547 at [12].}

13 Down v R [2011] NZCA 138.

equipment, and the false invoices supported the loan applications. The Court of Appeal observed that the Crown could have approached the case in a more straightforward manner, simply relying on the loan documents which Ms Down certainly had signed. But on the case advanced by the Crown it had to be proved that Ms Down had used the invoices. It had to be proved, therefore, that Ms Down had knowledge of the invoices, knew they were false and used them in at least some indirect way. The appeal was dismissed because her actions in executing the loan documents amounted to indirect use of the supporting false invoices. Without the loan documents, the invoices would have had no effect. And vice versa.

[45] Many of these cases involve a chain of documentation. It is helpful to examine the cases in that way. In the present case the chain is as follows:

(a) primary/initiating document: invoices;

(b) secondary documentation (relying on the primary): financial accounts and

GST returns;

(c) tertiary documentation (relying on the secondary): tax returns.

An accused may be found guilty of using a document later in the chain, even if they had not themselves prepared or handled the document, if that later document is nonetheless the intended or natural consequence of the earlier documentation with which they are associated. And Down shows culpability may occur even in reverse order (the invoices were primary, the loan documents secondary).

(2) Intending to obtain (or retain) pecuniary advantage

[46] It is important to note that the Act defines “obtain” for the purposes of s 228 as meaning to “obtain or retain for himself or herself or for any other person”.14

_{Secondly, in Hayes v R}15 _{the Supreme Court defined “pecuniary advantage” as}

_{“anything that enhances [a person’s] financial position”. It noted that “it is that}

14 _{Crimes Act 1961, s 217.}

15 Hayes v R [2008] NZSC 3.

enhancement which constitutes the element of advantage”.16 The Supreme Court held that there is a pecuniary advantage when a payment or benefit is received, and there is no need for the prosecution to prove the accused was not entitled to the payment or benefit.17

[47] Two points then. First, if the accused filed returns (or caused to be filed returns) intending to obtain tax advantages for their clients which would not otherwise have accrued to them (i.e. a deduction from income tax, or an input credit for GST, that they were not entitled to) that may be the unlawful obtaining of a pecuniary advantage, because “obtain” includes “for any other person”. Secondly, if by the filing of the returns the accused intended to obtain for themselves a benefit (being the unremitted portion of the payments made to TPS) that also may be the “obtaining” of an unlawful pecuniary advantage.

(3) Accused dishonest and have no claim of right

[48] The Crown concedes that if it cannot exclude a genuine, even if unreasonable, belief in the appropriateness of deductions (i.e. the legitimacy of the invoices), its case would fail. It relies on proving beyond reasonable doubt that the invoices used to justify the deductions claimed were fictitious, generated by or under the control of the accused, and did not in fact relate to real goods and services provided or to be provided. It accepts the face description of the invoice is not determinative. It needs to exclude the existence of any genuine supply for the amount billed, whether in accordance with description or not.

(4) Common enterprise

[49] At an early stage in the case it was submitted for the accused that the Crown could not rely on the “common enterprise” extension of liability in s 66(2) of the Crimes Act 1961. That argument, however, fell away after the accused had given evidence. In the course of that each of the accused associated themselves with the

_{impugned transactions which are the subject of the charges, which of course they}

16 _{At [16].}

17 See at [12], [16] and [25].

maintained were legitimate. There was one exception: the transactions involving the accused Barrie Skinner’s sister, Sharon Skinner. The evidence was that Mr Rowley had had no involvement with those transactions.

C. DISHONEST USE – EARLIER PERIOD CLIENTS Introduction

[50] It is useful to apply a chronological approach to analysis of the dishonest use counts. By and large the indictment follows that course, but there are some exceptions which I note later. My focus in this part of the written reasons is on clients with whom impugned transactions commenced prior to June 2007. As they arise, I will describe key events and players once, rather than repetitiously. An example is my discussion of the witness Mr Peter Uren.18 Another is

Ms Madondo.19

[51] At the end of this section of my written reasons I will sum up the state of the evidence viewed as at June 2007.20

Kathy Ertel – tax and GST returns – counts 1 & 2

[52] Counts 1 and 2 are as follows:21

THE CROWN SOLICITOR AT WELLINGTON CHARGES that BARRIE JAMES SKINNER and DAVID INGRAM ROWLEY (together with Shaan Winiata Stevens) on or about 14 December 2005, at Wellington, with intent to obtain a pecuniary advantage, dishonestly and without claim of right, did use a document, namely a GST return for the period ending 30 November

2005 for “Kathy Ertel”.

THE CROWN SOLICITOR FURTHER CHARGES that BARRIE JAMES SKINNER and DAVID INGRAM ROWLEY (together with Shaan Winiata Stevens) on or about 3 January 2007, at Wellington, with intent to obtain a pecuniary advantage, dishonestly and without claim of right, did use a

18 _{At [68].}

19 _{At [159].}

20 _{Starting at [265].}

21. I set these out as examples. I will not repeat the exercise for the subsequent 87 dishonest use counts.

document, namely an Income Tax return for the period ending 31 March

2006 for “Kathy Ertel”.

Background

[53] Ms Ertel is a Wellington solicitor. She practises on her own account. A close friend (and her accountant) was the co-accused, Mr Stevens. His firm, Guinness Gallagher Accounting Limited, was her tax agent. It filed her tax returns.

[54] Ms Ertel gave evidence of a single dealing with Mr Skinner. The exact date of the meeting is not clear, but it appears likely to have been on 9 September 2005. It is therefore the first of the transactions impugned in this trial. Mr Skinner was introduced to Ms Ertel by Mr Stevens as a taxation expert. He and Mr Stevens came to Ms Ertel’s home. At that meeting Ms Ertel wrote a cheque for $56,610 in favour of Mercer Trading. A repayment of $37,700 was then made back to Ms Ertel’s partner, a Ms Stewart, by direct credit from TPS’s trust account.

[55] This first transaction has features in common with later ones. First, Ms Ertel understood the purpose of the transaction involved her buying tax losses. She was clear in evidence that Mr Skinner had given her that explanation. Secondly, the repayment was not made back to the paying party (Ms Ertel) but to an entity associated with her (Ms Stewart). These two features are not invariably present, but often occur.

[56] The amount paid by Ms Ertel correlates to a Mercer Trading invoice dated

31 January 2005. The invoice therefore appears long to pre-date the meeting. The invoice is said to relate to “introduction, assessment and viability study of prudential business ventures, advice concerning business structure and potential partnership arrangements including introduction to joint venture partners and potential avenues for finance, together with advice on IT systems”. Ms Ertel said she had not seen the invoice when she wrote the cheque.

[57] A second Mercer Trading invoice, dated 28 March 2005, is for the same amount and in the same terms. Forensic evidence produced by Crown witness Simon Heard, an investigator in the Revenue’s Digital Forensic Unit, suggests that

this invoice was produced by Mr Rowley editing an earlier Mercer Trading invoice.22 This invoice appears to have been paid on 30 November 2005. Ms Ertel received back $37,700 – this time directly rather than indirectly.

[58] Ms Ertel gave evidence that she had never dealt with Mercer Trading, and had never received such services from it.

[59] It is necessary now to pause and consider the evidence of three other witnesses. Mr Stevens is the co-accused who assisted in establishing the transaction. The other two (Messrs Newman and Uren) are connected to Mercer Trading.

Mr Stevens

[60] I have referred earlier to Mr Stevens’ background, the fact that he is a co- accused on 13 counts, and that he pleaded guilty to those charges and others in

2011.23 While Mr Stevens has already been sentenced, and had nothing to achieve

by lying in evidence before me, it is proper that I approach his evidence as a co- offender with reserve. Mr Stevens was formerly a prominent Wellington accountant. He was prominent also in Māori and university circles. His fall from grace has been profound. He was quite emotional in evidence about what has happened to him. He was evidently dismayed that he had pleaded guilty, and taken his medicine, but that the accused had not done so. However, it is of course their right to test the Crown’s evidence by pleading not guilty. I find Mr Stevens’ evidence tainted to the extent he was motivated to a moderate (but not extreme) degree to secure the conviction of the accused.

[61] Mr Stevens’ evidence tended to play up the role taken by the accused in the establishment of the impugned transactions. He did not deny his own offending, but tended to diminish it by reference to the role played by the accused. My approach to Mr Stevens’ evidence is not to rely upon it in the absence of independent

_{corroborating evidence.}

22 Mr Rowley suggested in evidence that external users such as Mr Newman had access to the network using Mr Rowley’s name. I will discuss his evidence in a moment. It is unfortunate that Mr Newman was not cross-examined on the basis that he had external computer access in the manner suggested later by Mr Rowley.

23 See [15]–[17].

[62] There is a trenchant dispute between the accused and Mr Stevens as to who initiated the transactions impugned by the Revenue. Mr Stevens’ evidence was that the scheme had been devised by Mr Skinner. Mr Skinner’s evidence was that the originator of the scheme was Mr Stevens, that the accused recognised its illegality, but modified it so that the transactions with which they were associated had real substance through genuine underlying supply of real property, goods or services. That is a dispute I do not need to resolve. It is immaterial for present purposes who originated the scheme. The only question that matters is whether the accused acted dishonestly in relation to the transactions with which they were associated and are here charged. It is not a case where the accused were acting under Mr Stevens’ dictation. Nor were they acting on his advice, because on their version of events they disapproved of his methods.

[63] Mr Stevens’ evidence on the Ertel transaction was that at the time of the discussion he had with Mr Skinner (whether it was at Ms Ertel’s house or after) there was no substance to the transaction. Nor was there any discussion about the existence of a property deal involving carparking licences. That evidence is consistent with the evidence of Ms Ertel.

Mr Newman

[64] The sole director and shareholder at the relevant time of Mercer Trading, a Mr Frank Newman, gave evidence. Mercer Trading was formerly called Joyce Group TA Services Limited. Ownership of that company appears to have transferred to Mr Newman on behalf of Mercer Trust (and ultimately Kilbirnie Plymouth Trust) in March 2004. Mr Newman became a director of Mercer Trading in 2004. He ceased as a director in May 2006 and does not appear to have been aware that its name then changed to Merc Trading Limited. He was also sole trustee of the Mercer Trust.

[65] Mr Newman was a longstanding employee of, and contractor to, TPS. At the time of the two invoices issued to Ms Ertel in 2005 he was based in Nelson. The invoices feature his Nelson PO Box address. In 2006, however, he was arrested. He

served a term of imprisonment from July 2007 to November 2009 for sexual violation of a child. He remains on parole.

[66] His evidence was that he did not do much as a director of Mercer Trading – “nothing really”. He did not actively manage the company. He did not issue invoices. He did not undertake any of the work referred to in the Mercer invoices. He accepted he may have had bank signing authority for the company. Notably he was directed in evidence-in-chief to an email sent to him by Mr Rowley on

19 January 2007. The email sent Mr Newman the account numbers for Mercer Trading and the Mercer Trust. In the email Mr Rowley asked Mr Newman to close the accounts, and keep what was left in the accounts for himself. Some $350. When asked by Mr La Hood why he needed Mr Rowley’s permission to take the money from the accounts if he was the sole shareholder, director and trustee, Mr Newman was unable to say.

[67] Regardless of the offending for which he was convicted and imprisoned, Mr Newman appeared to me to be a genuine witness, attempting to assist the Court where he could. His memory was not especially good, but my clear impression is that as far as Mercer Trading and the Mercer Trust were concerned, Mr Newman was simply a nominee for the accused.

Mr Peter Uren

[68] Mr Peter Uren is said by the accused to be the ultimate entity behind three other key invoicing entities: Case Marlow, Mercer Trading and Marsden No 2 Trust. Mr Uren is an Australian. He lived in New Zealand for a number of years, but did not take to life here. After that he returned to Australia, and then moved on to the Philippines. He lives there now. He gave evidence in this trial by video conference facility. He is a large man. He has a larger personality.24 I do not find him to have a strong grasp of detail. He is prone to occasional hyperbole. But on the essentials I

_{believe his evidence was intended to be truthful.}

24 This proved unexpectedly useful at trial. Faced with the Manila video-conference suite manager’s attempt to bring the conference to a premature end (so another client could use the facility), I invited Mr Uren to hold the fort and refuse to leave. He did so and we were able to complete his evidence.

[69] I approach his evidence with a degree of reserve for the reasons just given. The essence of his evidence was to deny that he had any direct control over the issuing of invoices for the entities listed above. I accept that evidence. He also denied that he was either actively or actually a beneficiary for the trust behind these entities, Kilbirnie Plymouth Trust and Patero Trust. That evidence is not entirely right. It is clear he has received a number of payments from the former trust, as a beneficiary in some capacity. But I do accept his evidence that he was in no sense an active participant in their affairs. That view is supported by a number of considerations.

[70] First, I am satisfied that Mr Skinner was responsible for the sending of a “briefing paper” to Mr Uren in March 2012 (via a process including the setting up of a separate email account). The form of the paper is that of a script, for him to use in speaking with the Revenue and, potentially, at this trial. Second, I am very doubtful that the shareholding in the operational entity of Kilbirnie Plymouth Trust, KPIL, is held by the accused as trustees for Mr Uren’s ultimate benefit. That entity is said to be held by Messrs Skinner and Rowley in 3:1 proportions via separate trusts. Why KPIL would need to be held in that way, if ultimately for Mr Uren’s benefit, is unclear. There are however a number of entities jointly owned by Messrs Skinner and Rowley that are held in that proportion. That, for instance, was the ratio of their holdings in TPS for some of the time. Third, there is an email dated 1 August 2007 from Mr Rowley to a Mr Matthew Brown at Equitable Group, a moneylender, seeking funding for the development of a new apartment block to be built between the St George Hotel and O’Reilly Avenue. That property was known at trial as the “St George O’Reilly” development. The email does not refer to Mr Uren’s interest at all. The only overseas investor referred to is a Mr Borg, whom I will discuss in a moment. It refers to Mr Skinner’s development experience. It offers the personal guarantees of both accused. There is no reference to pre-sales, which would have been relevant to obtaining finance from Equitable Group. Fourth, there is an email from Mr Skinner to a Mr Erne Joyce on 21 June 2007. That concerned the development of the St George O’Reilly project as a joint venture. Again it does not refer to Mr Uren. Nor does it refer to the Kilbirnie Plymouth Trust. Rather, and for reasons unclear to me, it suggests the joint venture partner would be MCK – a company said to be beneficially owned by Ms Madondo. Finally, Mr Borg was said

to have been the purchaser of the St George O’Reilly land from Mr Uren. In evidence he had limited recall of the details of that event. But it was Mr Skinner, he said, who was servicing the $4 million loan over that property. I conclude that the St George O’Reilly land was beneficially owned at least in large part by the accused, and that they (or at least Mr Skinner) may continue to retain a beneficial interest in it.

Carpark licences?

[71] In cross-examination Ms Ertel confirmed that she had never been told (i.e. either by Mr Stevens, the accused or anyone else) that the Mercer Trading invoices involved licences over carparks. She had never seen or executed an agreement for sale and purchase for such a purchase.

[72] Ms Ertel was not taken to a specific licence agreement in cross-examination. But shortly after her evidence concluded the defence produced through Mr Newman a licence agreement between Mercer Trading and Ms Ertel dated 31 January 2005. This was said to have been found on an external computer hard drive only recently located and analysed. The final page of the agreement appeared to have been signed by Mr Newman. But not by Ms Ertel. Mr Newman initially said that he would have signed it on the date stated on the face of the agreement. But under re-examination he admitted he could not recall the licence agreement at all. He had had no discussions with Ms Ertel. He did not know her.

[73] Mr Skinner gave evidence of having met Ms Ertel in September 2005 at the request of Mr Stevens. He said that Ms Ertel had a large tax liability. Mr Stevens knew that Joyce Group Limited, which was developing the first floor of the St George Hotel was proposing to develop internal carparks in that space. Mr Skinner said that Mr Stevens indicated that he believed the cost of the licence would be a deductible expense, and that she would also benefit from an unspecified timing difference benefit. It was not clear why Mr Skinner’s assistance was being sought, given Mr Stevens was aware of all these facts himself. On Mr Skinner’s evidence his role was a passive one.

[74] Mr Rowley gave evidence that Mercer Trading, although nominally directed and owned by Mr Newman, was in effect still under the control of Joyce Group Limited, the owner and developer of the St George Hotel building, in 2005. It will be remembered that until March 2004 it was called Joyce Group TA Services Limited.25 It had formerly provided territorial authority services for the Papakura District Council. It had been taken under Kilbirnie Plymouth’s wing in 2004 “as a favour” because of potential leaky home liabilities. It then engaged in commercial ventures under the limited oversight of Mr Newman, and of Mr Rowley.

[75] Mr Rowley’s evidence was that the licence agreement had been produced and negotiated by Joyce Group back in January 2005. He had, he said, altered not a word on its face. It is clear that the document in its original form was a template. Mr Rowley was cross-examined as to his subscription to a website that provided contract document templates, biztree.com. He admitted that he was a subscriber. He could not recall for how long he had been so. I am satisfied from the form and content of the licence Ms Ertel is supposed to have entered that the origin of that document was a biztree template.

[76] There are then three possibilities:

(a) Joyce Group Limited prepared and negotiated the contract with Ms Ertel on 31 January 2005;

(b) Joyce Group provided Mr Rowley with the template and he filled in the name of Ms Ertel;

(c) Mr Rowley did the whole thing (at what point being unclear).

[77] Mr Rowley was insistent that the position was (a) above. He told me he had not altered a word of the document himself. There are some difficulties with those propositions which in the end I find compelling. The first is that Ms Ertel herself has

_{no recollection of entering into such a licence agreement. Second, it is unclear why}

25 See [64].

she would have entered into a licence agreement in January 2005 when she only consulted Mr Skinner in September 2005, and the payments flowed thereafter.

[78] A third problem is that the licence agreement provides on its face for no return of any proportion of the moneys paid by Ms Ertel. To explain the two repayments of $37,700 to Ms Ertel, Mr Skinner gave evidence that Ms Ertel had been made a discretionary beneficiary of the Mercer Trust (which was the intermediate owner of Mercer Trading). A document purporting to be a resolution of the “trustees” of the Mercer Trust (in fact only Mr Newman was a trustee) dated

9 September 2005 was produced by the defence. So too a deed of appointment the previous day signed by Messrs Skinner and Rowley appointing Ms Ertel a discretionary beneficiary. The deed records that the reason for the appointment is to distribute trust capital by way of loan to Ms Ertel, with demand for repayment being made only in the event of commencement of construction of the carpark project. Thus put together the scheme worked on the basis that Ms Ertel paid some $56,000 per carpark, but then received $37,700 of it back by way of loan, to be repaid on the commencement of construction. A complicated way to arrange such a transaction. Of course, Ms Ertel’s evidence was that she knew nothing whatever of any of that. Forensic evidence given by Mr Neville Winter, a senior IT investigator in the Revenue’s Digital Forensics Unit, shows a document appointing Ms Ertel a discretionary beneficiary appears to have been worked on (on the hard drive) in the days immediately prior to trial. That could only have been done by Mr Rowley.

[79] A fourth difficulty with the defence explanation is that if the licence agreement was prepared by Joyce Group, and Mr Rowley had no hand in it, forensic evidence produced by Mr Winter shows clearly that the portable hard drive in Mr Rowley’s possession bore a Word (rather than PDF) version of the licence agreement. It is unclear why, if the agreement was negotiated by Joyce Group, they would have provided Mr Rowley with a Word version of it. He was unable to provide a cogent explanation.

[80] Finally and most fundamentally, Mr Rowley’s claim that the licence agreement had been produced and negotiated by Joyce Group in January 2005, and that he had altered not a word of it, appeared to be disproved by a document the

Crown located on the portable hard drive. That device was produced by the accused. On it they claimed to have located only PDF copies of the licence and other transactional documents which will be discussed later in these reasons. The hard drive appeared to contain no Word documents, save in some MYOB folders. The absence of those Words documents is consistent either with the defence position that there were none, or with the Crown position that they had been deleted.

[81] But one document had not been fully deleted. That was a copy of the licence agreement with Ms Ertel which Mr Winter found in the deleted items folder when he analysed the hard drive.26 The metadata attached to the document showed that the author was “Dave & Avelyne” and the Word licensee was “TaiSan Trust”. It is a matter of record that Mr Rowley goes by the name “Dave”, that his wife is Avelyne Rowley, and they have a family trust called the “TaiSan Trust”. It is therefore highly probable that the document was edited when the hard drive was connected to Mr Rowley’s home computer.

[82] The metadata shows that the file was apparently accessed on 8 September

2005 with changes made that same day in the course of an eight minute session. Attached to the document are a series of embedded copyright statements. They appear in white print – so are not normally visible. They state variously that the document is subject to copyrights held by Envision SPS 2007, or Biztree 2006. If the licence agreement was genuinely entered in January or even September 2005, then these 2006/2007 copyright statements have no place in the document. There is, therefore, a very high probability that the document has been worked on the hard drive while connected to Mr Rowley’s home computer with its computer clock altered from a post-2007 date to 8 September 2005. Such alteration is functionally easy. The IT evidence given before me was the metadata would then capture the source computer date as the only available temporal point of reference.

[83] Faced with this development, Mr Rowley attempted to parry. He said that his evidence had been that he did in fact change document formats. But his evidence to

_{me had been that he had not touched the licence agreements, and they had simply}

26 Interestingly the reason for that is that, absent the use of forensic tools, the recycle bin will only be visible to the specific author originally connected. If the recycle bin is filled using the home computer, it may only be seen and emptied using the same computer.

come from Joyce Group. When reminded by Mr La Hood of that answer, he said it was possible (although he could not remember it) that he had been asked in September 2005 to provide a copy of the document. But the problem with that answer is that the document contained the 2006/2007 copyright statements. He then suggested that perhaps he was asked to provide a copy at a later stage. Mr La Hood then put to him that in that event it looked as if he had deliberately changed the date on his home computer to suggest access at an earlier, rather than the true, date. In the end Mr Rowley had no satisfactory answer to the evidence with which he was confronted that long Monday afternoon. His answers were evasive and unsatisfactory.

[84] Mr Winter was recalled by the Crown to give further evidence. In cross- examination Mr Lennard showed Mr Winter the current version of the licence agreement on the biztree.com website with the embedded copyright statement highlighted. That shows a 2010 copyright notice. Mr Winter accepted that it was likely, therefore, that the document located in the deleted items folder on the hard drive was a version of the biztree template created before 2010. This could mean either two things. First, that Mr Rowley had worked on the document before 2010. Secondly and alternatively, that Mr Rowley had downloaded a version of the licence agreement before 2010 (recalling that he had been a subscriber for some years) but had worked on the document at any time thereafter.

[85] I conclude that Mr Rowley, contrary to his earlier evidence, had opened and edited a Word version of the Ertel licence document. I conclude that he altered the computer clock to mask that action and attempted unsuccessfully to delete the document for the same purpose. But I cannot be certain when he undertook those actions.

Distribution of retained money

[86] Following the payment of $56,610 paid on 9 September 2005, and repayment of $37,700, a balance of $18,910 was left in the TPS trust account. Allowing for other amounts in the trust account it stood at that date at some $10,000 more –

$28,662. Other payments were made over the course of the next week, but on

16 September the trust account is shown as being debited $7,500 for “B Skinner Mercer Trust distribution” and $2,500 to the D Rowley Mercer Trust for “D Rowley Mercer Trust distribution”. Those amounts in due course were received by each of the accused in their personal bank accounts that same day. A similar outcome occurred in relation to the second payment. But this time the distribution to the accused occurred the following day, again in the same 3:1 proportions. A distribution of $5,850 to Mr Skinner was made and received in his personal bank account, and to Mr Rowley of $1,950 (similarly received).

Conclusions on counts 1 and 2

[87] Having considered the evidence of Ms Ertel, Mr Stevens, Mr Newman, Mr Uren, Mr Winter and that of the accused, I reach these conclusions. First, where in conflict, I prefer the evidence of Ms Ertel over the evidence of the accused. Second, I have no reasonable doubt remaining that the transaction entered in September 2005 was in accordance with the terms Ms Ertel described. Third, I do not believe the evidence of the accused that there was a genuine underlying transaction concerning carparking licences (negotiated by Joyce Group rather than themselves or Mr Stevens). Fourth, nor do I have any reasonable doubt that there was no genuine contemporaneous appointment of Ms Ertel as a discretionary beneficiary of the Mercer Trust and distribution to her (on a loan basis only) of the repayments she in fact received in September and November 2005.

[88] I am satisfied beyond a reasonable doubt that counts 1 and 2 have been proved by the Crown. Specifically:

(a) the invoices described above were generated by the accused in the course of a common enterprise;

(b) there was no genuine underlying supply for the invoices;

(c) the accused knew that the invoices would be used by Ms Ertel to justify income tax deductions and a claim for GST input credits, and thereby obtain a pecuniary advantage;

(d) the accused acted dishonestly in facilitating the deductions and credits claimed by Ms Ertel, and the pecuniary advantage thereby obtained.

Jamie Wilson – tax and GST returns – counts 3 & 4

[89] The Wilson transactions occurred in March 2006. They are therefore second in chronological order after Ms Ertel. Counts 3 and 4 are in similar terms to counts 1 and 2, save that Mr Stevens is not charged jointly. Count 3 concerns Mr Wilson’s March 2006 GST return, and count 4 his 2006 tax return.

Background

[90] Mr Wilson is English. He has been a New Zealand tax resident since 2003. He is a consultant to the film industry. He specialises in organising events such as the premieres of the Lord of the Rings – Return of the King and King Kong. As the result of a busy and profitable year 2005/06 he found himself facing a substantial tax bill. TPS were Mr Wilson’s accountants. Ms Margaret Chapman, a staff member, did his work. He did not appear to have any contact with either of the accused. Nor did he have anything to do with Mr Stevens. He has never been a client of Mr Stevens.

[91] In 2006 he met Ms Chapman to discuss his tax issues. She told him that she might have a solution to his problems. He went to a meeting at the offices of TPS. Attending with Ms Chapman was a man whose identity Mr Wilson does not now recall. He cannot identify that person as one of the accused. Mr Wilson says the male attendee advised him that he could buy third party debts at a discounted price to alleviate his tax problems.

Invoices

[92] Following the meeting Mr Wilson received two invoices. The first was from a company called Showcase Limited (now Case Marlow), the address of which was shown as “C/- Tax Planning Services, PO Box 2106, Wellington”. It was dated

24 March 2004 and was for “consultancy”. The amount was $60,000 plus GST (in

total $67,500). A second invoice, this time dated 31 March 2004, was provided by Mercer Trading. It was also for “consultancy”, and was for an amount of $54,000 plus GST (in total $60,750). It is a mystery as to why the invoices were dated 2004. There is no question that Mr Wilson received the invoices in or about March 2006. Both are annotated in his hand as having been paid on 31 March 2006. The TPS trust account was credited with payments from him that same day.

[93] Under cross-examination, Mr Rowley accepted that he had probably prepared the Mercer Trading invoice. Certainly, there was forensic evidence from Mr Simon Heard, an IRD forensic IT analyst, that someone using Mr Rowley’s user ID created the Mercer Trading invoice by editing an earlier Mercer Trading invoice prepared for Ms Ertel. Forensic analysis cannot say when he did so, but it is logical to assume that it occurred in March 2006. He was not prepared to accept that he had prepared the Showcase invoice, although he accepted that it was prepared at about the same time, addressed to the same billing address, for the same narrative item in the case of each invoice (“consultancy”) and the address given for Showcase Limited was TPS’s. I have no doubt that Mr Rowley did in fact create both invoices, although probably in 2006 rather than 2004.

Payments and repayments

[94] Mr Wilson paid the full amount of both invoices (in total $128,250) on

31 March 2006. They were banked into TPS’s trust account. He received back, the same day and directly, two amounts of $45,000 and $40,500. That is, exactly two- thirds the amounts he had paid. The GST-exclusive amount for the two invoices then appeared in Mr Wilson’s year end accounts for the year ended 31 March 2006, as “Sub-contractor – $114,000”. Those accounts were prepared by Ms Chapman of TPS.

What was Showcase/Case Marlow?

[95] The director of Case Marlow (formerly Showcase Limited) and its sole shareholder, Mr Kam Chai Law, gave evidence. He is Mr Rowley’s brother-in-law (Mr Rowley having married his elder sister).

[96] In May 2006 Mr Law became the sole director of the company. Mr Law does not appear to have been well qualified for that appointment. He had been a chef. Currently he runs a cleaning and painting business. He gave his evidence under translation. His English is vestigial. He came across as a nice man, but utterly bewildered as to his involvement in Case Marlow, and in the present Court process. He did not know what Case Marlow did. He was asked to be its director by his brother-in-law, Mr Rowley. He had not heard of the clients that Case Marlow issued invoices to after May 2006. He could not remember ever issuing an invoice for goods or services from Case Marlow. He had never done any consulting or planning work for anyone through Case Marlow (those services commonly being the subject matter of invoices issued by Case Marlow, as we will see). He did not believe he had ever provided goods and services to Harding Electrical Limited, which company

is the subject of the next series of counts.27 What he now knows about Case Marlow

appears to be the result of a discussion with a Chinese female accountant working for TPS (whose name he could not recall). That discussion took place after he was interviewed by the Revenue in September 2010.

What were the invoices for?

[97] Mr Wilson said that he had no knowledge of a company called Showcase (or Case Marlow) and that he did not receive any products or services from either. In other words, the invoices were fictitious. Nor did Mr Wilson have any recollection of entering into a transaction for purchase of a carpark licence at the St George Hotel development, which he could rent to others. He was clear that he would have remembered had he done so, but it was never suggested. He had no interest in any such investment. Nor did he recall receiving any advice that he had become a discretionary beneficiary of a trust. He says that he sought assurance that the transaction was legal, understood it to relate to acquisition of debts of other clients of TPS at a discount (hence the return payment), and generally trusted TPS as his accounting advisers to act lawfully.

[98] The accused say the invoices actually related to carpark licences. As with

_{Ms Ertel they have produced two licence agreements, each for two carparks in the St}

27 See at [104].

George level 1 internal carparks project. These too were produced from the hard drive discussed earlier.28 Mr Skinner’s evidence was that he was aware of these transactions, if not directly involved in negotiating them. (He accepted he had negotiated Ms Ertel’s licence). There are several curious features about these transactions. The first is that all four carparks originate with Mercer Trading Company. One of the licences (dated 31 March 2006) is by Mercer Trading

Company Limited direct to Jamie Wilson. The second licence is also dated 31

March 2006, but comes from Showcase Limited. This was explained by Mr Rowley as Showcase attempting to assist Mercer Trading to place the carpark licences. But I have difficulty accepting that explanation when a document was also produced by the defendants that shows that the day before, 30 March 2006, Mercer Trading licensed those carparks to Showcase Limited in the first place. There was no logic for such a transaction, as opposed to Mr Wilson directly taking all carpark licences from Mercer Trading. All transactions were done within the space of 48 hours. The alternative, and more likely, explanation is that the licences have been devised to fit with the invoicing entities.

[99] The licence agreements have an apparent date of 31 March 2006 in the metadata extracted from the hard drive. But Mr Neville Winter, the forensic analyst called by the Crown, established to my satisfaction that the metadata date had been altered by adjusting the clock on the source computer when downloading the agreements to the external hard drive. In particular, Mr Winter was able to take me to the update sequence numbered (USN) log for the hard drive. As items are added, deleted and modified on the drive they are recorded in strict chronological order on the USN log. The time stamp shown in the log may be altered, because it shows the clock for the connected source computer. But the sequence will remain chronological. Mr Winter’s analysis demonstrates that a regularly dated computer had been connected to the external hard drive on 12-13, and 21-24 April 2012. But after that someone (and that person could only be Mr Rowley) had connected a computer with an altered time clock to the external hard drive. That is shown because on page 23 of the 368-page USN log produced by Mr Winter the time stamp

_{date sequence runs regularly up to 24 April 2012 (08.04 am) and then jumps to 7}

28 See at [80].

September 2005 (09.22 am). Within a minute of that event a document called “Deed of Appointment of Discretionary Beneficiary Template.doc” is created on the hard drive. Some ten minutes later a document which appears to be an appointment of discretionary beneficiary by the Mercer Trust to Ms Ertel is worked on.29

Mr Wilson’s licences from Mercer Trading and from Showcase are worked on later in the sequence. It is not possible, because of the way in which the altered time stamps jump around, to identify precisely when that was. However because for a brief period in the middle of the log the date jumps back to 27 April 2012, and that is likely to be a genuine date, it can be inferred that the work was done on these documents between 24 and 27 April 2012. That is, in the days immediately prior to the commencement of trial.

[100] Neither licence agreement was in fact signed by Mr Wilson. He of course said he had never seen any such licences, or had anything to do with them. The licences are, however, signed by Frank Newman. We have met Mr Newman before, in the context of counts 1 and 2.30 It is not clear why Mr Newman was signing a licence on behalf of Showcase. He had never been a director of Showcase/Case Marlow. Mr Newman could not remember signing either licence, or ever dealing with Mr Wilson. Even more curious, as Mr Rowley accepted, the two execution pages are exactly identical facsimiles. Mr Rowley suggested that somehow the

pages must have been muddled up. That is, I suppose, possible. A difficulty lying in the way of that proposition, however, is that other but identical facsimile signature pages have also been used in two other licences: that involving Ms Ertel and another involving Harding Electrical Limited (see below).

[101] In Ms Ertel’s case the repayments were justified by reference to a supposed advance from the Mercer Trust. In the case of Mr Wilson, the accused produced resolutions, correspondence and deeds of appointment from two trusts, the Mercer Trust (in respect of the Mercer Trading licence) and the Patero Trust (in respect of the Showcase licence) the contents of which are very similar to those produced in respect of Ms Ertel. In each case the deeds of appointment have been signed by both

_{accused. Mr Wilson, of course, said he had seen none of that.}

29 _{See at [78].}

30 At [64].

Conclusions on counts 3 and 4

[102] As was the case with Ms Ertel, so too in the case of Mr Wilson I prefer his evidence wherever in conflict with that of the accused. I accept Mr Wilson’s evidence that all he thought he was doing was buying third party debts at a discounted price. I accept that that was the explanation given to him at that time. I do not accept, and I do not believe, that the carpark licences were discussed with Mr Wilson, or that any such transaction was entered. Nor do I accept that the repayments made to Mr Wilson were repayable advances from the Mercer or Patero Trusts.

[103] I am satisfied beyond a reasonable doubt that counts 3 and 4 have been proved by the Crown. Specifically:

(a) the invoices described above were generated by the accused in the course of a common enterprise;

(b) there was no genuine underlying supply for the invoices;

(c) the accused knew that the invoices would be used by Mr Wilson to justify income tax deductions and a claim for GST input credits, and thereby obtain a pecuniary advantage;

(d) the accused acted dishonestly in facilitating the deductions and credits claimed by Mr Wilson, and the pecuniary advantage thereby obtained.

Harding Electrical Limited – tax and GST returns – counts 5 to 12

[104] The third set of transactions in date order, after Ms Ertel and Mr Wilson, involved Harding Electrical Limited. These transactions began in about June 2006.

[105] The accused faced eight counts in relation to the tax affairs of Harding

Electrical. Counts 5, 6, 7, 9, 10 and 12 concern Harding Electrical’s GST returns for

July and September 2006, January and July 2007 and March and September 2008.

Counts 8 and 11 concern Harding Electrical’s income tax returns for 2007 and 2008.

Background

[106] As its name suggests, Harding Electrical is an electrical contracting company. Its principal directors and shareholders are Messrs Damian Moloney and Mark Lavery. Mr Moloney is Mr Skinner’s brother in law. Messrs Moloney and Lavery own 70 per cent of the company. The remaining 30 per cent is owned by a company called Black Elton Limited. It was described as a “silent partner”. Harding Electrical has around 40 employees. Neither Mr Moloney nor Mr Lavery are particularly focused on the accounting side of the business. They have an “accounts lady” who seems to do all that for them. In addition, TPS (Mr Rowley) provided accounting services. This started in about 2005. TPS prepared Harding Electrical’s monthly and annual accounts. GST returns were undertaken by the accounts lady. She and Mr Rowley did the tax returns together. TPS also did Mr Moloney and Mr Lavery’s personal tax returns.

[107] In 2006, Harding was in financial difficulties. It had cash flow difficulties. Its debtors were paying too slowly. Mr Moloney told Mr Rowley this. Mr Rowley suggested a scheme which might assist their cash flow difficulties. It involved the raising of invoices, a significant proportion of which would be paid back to them. Mr Lavery and Mr Moloney both professed not to understand how the scheme improved their cash flow. They could not answer Mr Lennard’s pointed question in cross-examination. “If you pay $10, and only get $8 back, how is your cash flow improved?” The reality of course is that it was improved by Harding also claiming GST input credits and tax deductions for the GST exclusive portion. In that way $10

could become $12.31 But neither Mr Moloney nor Mr Lavery said they understood

that at the time. Indeed it is not clear that they understand it even now. They are electricians, not accountants.

_{[108] Were the invoices fictitious? As to that, I am left in no doubt.}

31 Even allowing for the $2 said to be kept by TPS. The exact net result to the client is $12.04.

Mercer Trading invoices

[109] Three invoices were raised by Mercer Trading in April-June 2006. They total

$60,000 plus GST of $7,500. Forensic evidence suggests the three invoices were created by an unknown author at TPS on 19 June 2006. It is however likely to have been Mr Rowley or someone at TPS acting under his direction. The invoices were provided to Harding Electrical by Mr Rowley. They are said to relate to “project consultancy work”. Harding Electrical did not receive any such project consultancy work from Mercer Trading. It never dealt with anyone from Mercer Trading. On

29 June 2006 Mr Moloney received back $48,750 from the TPS trust account into his personal bank account.

[110] The accused said in evidence that these invoices relate, again, to a carpark licence. Mr Skinner did not say much on that score. He recalled speaking to his brother in law Mr Moloney about his cash flow problems. In the course of that there was a discussion about obtaining a carpark licence “for the purposes of ... the jobs he was doing in town”. It was said to be a very short discussion and Mr Skinner did not negotiate the licence. Mr Rowley gave more detailed evidence of the transaction. He said that a carpark licence had been sold to Harding Electrical, at a discounted rate, for its use while performing jobs in the city. Why an electrical contracting business with cash flows problems would wish to pay good money to buy a fixed location carpark was not apparent.

[111] A copy of a licence agreement between Mercer Trading and Harding Electrical was produced by the accused through Mr Newman. It was not signed by Harding Electrical. This was a document Mr Newman could not specifically recall, although it bore his signature. It was also a document which curiously had an exact facsimile of the signature Mr Newman had used on the licence supposedly entered by Ms Ertel.

[112] A copy of the licence agreement was located on the hard drive with an apparent creation date in the metadata of 31 March 2006. But this was another instance – as we have just seen with Mr Wilson’s licence agreement – where Mr Winter’s forensic evidence showed that the time stamp had been altered via the

connection of a source computer with an adjusted clock, sometime between 24 and

27 April 2012.

[113] Messrs Moloney and Lavery denied that the Mercer Trading transaction had been done as an investment in a carpark licence, or that they were beneficiaries of any trust established as part of the cash flow improvement scheme that they had worked out with Mr Rowley.

Case Marlow invoices

[114] In addition eight invoices were raised by Case Marlow Limited between

October 2006 and March 2008. They were for a total of $155,625 plus GST of

$19,451 (totalling $175,076). Payments back to Messrs Moloney and Lavery of

$60,672 have been identified. It is likely however that either some invoices were upaid, or more was in fact repaid. The content of these invoices was explicit: they related to particular supplies such as a “computer room switchboard”, “supply of 96

Type M lights” and supply of an “Asco 3000A SLS”, whatever that may be.

[115] None of this was true according to evidence given by Messrs Moloney and Lavery. Harding Electrical had received such goods, but from suppliers other than Case Marlow. Those suppliers had already been paid, and the goods on-charged to Hardings’ relevant clients. The Case Marlow invoices simply mirrored those invoices. Mr Moloney said (and there was no reason to disbelieve this) that none of the Case Marlow invoices were ever charged to their clients.

[116] Mr Moloney said the invoices were provided by Mr Rowley, based on information provided by him as to the narration. There was evidence before the Court of emails between Harding Electrical (Mr Moloney) and both Mr Rowley and Mr Skinner. In one dated 15 December 2006, Mr Moloney instructs Mr Skinner as to what the Case Marlow invoice should say. This was based, said Mr Moloney, on the content of an existing invoice Harding Electrical had received from someone else. In due course a Case Marlow tax invoice was issued bearing the details conveyed by Mr Moloney. In another email dated 27 August 2008 Mr Moloney

instructs Mr Rowley as to “amendments” to four Case Marlow invoices. In due

course invoices as amended were produced by Mr Rowley.

[117] Mr Moloney and Mr Lavery were both clear that no such goods were actually received from Case Marlow.

[118] Mr Rowley gave evidence-in-chief that Harding Electrical had in fact taken residual electrical stock belonging to Showcase/Case Marlow from a factory in Daniell Street, Newtown. He explained this on the basis that it assisted Harding Electrical’s cash flow problem. There are a number of problems with that evidence. The first is that it is absolutely contradicted by the evidence of Messrs Moloney and Lavery. Second, it is difficult to reconcile with the emails, in which Mr Moloney was instructing Mr Rowley as to the narration, (and, he said, based not on stock received but on the contents of other identical invoices). Third, it does not explain the repayments then made from the TPS trust account. Unless, that is, the invoices were deliberately inflated. Which would merely create a different route to the same conclusion on offending.

[119] The accused also produced a curious document purporting to be a resolution of trustees of the Patero Trust, dated 27 February 2007, although its text refers to actions by the Mercer Trust. It purports to add Mr Moloney as a discretionary beneficiary of the Mercer (although it may be Patero) Trust. Then there is a second version of the document, the same date, which correctly refers to a resolution of the Patero Trust, but still appoints Mr Moloney a discretionary beneficiary of the Mercer Trust. In each case the resolution is that he be added as a discretionary beneficiary “for the purpose of proceeding with the purchase of electrical supplies”. It is unclear why electrical goods sales would need to attract trustee attention. The deed of appointment does not itself appear to be in evidence. Mr Moloney said he had never seen these documents before.

[120] Having heard the evidence as to the basis of the invoices, I disbelieve the evidence given to me by Mr Rowley and accept that given to me by Mr Moloney and Mr Lavery.

Voluntary disclosures

[121] In evidence were two voluntary disclosures signed by the directors of Harding Electrical on 1 October 2010. These stated the tax payer was in error in relation to payments claimed in the 2006-2009 tax years. The evidence from Messrs Moloney and Lavery was that these documents were prepared by Mr Rowley.

[122] Before signing, Mr Moloney had taken advice from Mr Grant Pearson, an experienced tax practitioner and partner in Duncan Cotterill, Wellington. Mr Pearson gave evidence. He said he saw Mr Moloney and Mr Lavery when they received s 19 notices from the Revenue requiring them to attend interviews. Mr Pearson attended those interviews with them. Before attending the interviews he sought information from Mr Moloney as to the basis for the credits and deductions that had been claimed. Mr Moloney had explained the problem in terms of a scheme that eased their credit exposure. Mr Pearson had difficulties with that explanation. He rang Mr Rowley. Mr Rowley said to him that Mr Moloney’s explanation was correct. He said that Case Marlow had in fact made supplies of goods. The charging basis was valid, although there “might be some issues with journal entries”. Mr Pearson then attended the s 19 interview with Mr Moloney on 22 September

2010.

[123] A few days later Mr Rowley appears to have approached Mr Moloney and said that voluntary disclosure should be made. He said there was a possible concern about tax avoidance, and the better course was to make a voluntary disclosure, reverse the tax position and avoid further problems. Voluntary disclosure documents were prepared by Mr Rowley.

[124] Where voluntary disclosures were entered into at the recommendation of the accused, on terms provided or approved by the accused, I bear that in mind as evidence going to the credibility of any allegedly genuine underlying transaction. This is not a s 35 issue.32 Rather it is a matter of drawing an inference against the accused’s evidence where it is inconsistent with a disclosure document bearing their

_{own imprimatur.}

32 Of the Evidence Act 2006 (previous consistent statement of witness – here the client).

[125] Both Mr Pearson (who is, as I have said, an experienced tax practitioner) and Mr Roger Thompson (a chartered accountant and partner in Staples Rodway, the Auckland chartered accounting firm) gave evidence about this. Both said to me that a voluntary disclosure and reversal of claimed deductions and GST input credits would not be necessary where the deduction was based on an incorrectly expressed invoice or set of financial statements, if there was nonetheless an underlying genuine transaction of a different but still claimable kind. As Mr Thompson said:

So if that was correct and the expense was deductible anyway but had just been misclassified ... I would say there’s no need for voluntary disclosure because in many cases ... there’s very little information provided with the tax return to say what an expense was or wasn’t, because really only the net amount is returned. There is what’s called an IR10 which records a sort of summary of some transactions ... and if that IR10 was wrong, which it may be if it’s been classified wrongly, but the assessable income was still correct

... I wouldn’t see a need for a voluntary disclosure.

[126] Towards the very end of the trial Mr Rowley gave evidence that he and Mr Skinner had not in fact been involved in the preparation of voluntary disclosures, albeit they had written to clients about them and had supplied them to clients directly on a number of occasions. His evidence was that they had brought in other staff accountants from TPS in the course of one weekend to develop the documents. The wording came from counsel. Mr Rowley said he and Mr Skinner did not review the disclosures and did not prepare them in any form. I do not accept that evidence. It is clear that in many cases the voluntary disclosures were entered into by clients on the written and verbal recommendation of the accused. Although Mr Skinner led that exercise, Mr Rowley accepted that he was aware of the approach being made to clients. In some instances (such as the present one) I accept the evidence of the client that Mr Rowley in fact was the person who provided the disclosure. I do not accept that either Mr Skinner or Mr Rowley did so without awareness that the voluntary disclosure documents threw doubt upon the validity of the underlying transactions as being deductible or claimable by way of GST input credit. If the explanations now given by the accused in evidence held any water at the time, I cannot accept that they would not have featured in some manner within the voluntary disclosures. The disclosure meant each client would face a substantial tax bill. The accused faced serious issues with, and potential liability to, their clients as a consequence.

[127] By way of example, on 23 September 2010 Mr Skinner wrote to the

Godfreys33 in the following terms:

Further to our letter of 16 September 2010 it now appears likely that voluntary disclosures will be required as the Inland Revenue is not accepting that the transactions completed are valid for income tax or GST purposes. We have therefore prepared a voluntary disclosure covering the transactions completed for your consideration.

...

While we have been advised that Tax Planning does not have a legal obligation to cover penalties and the core amount paid on this transaction, on a without prejudice basis, we are prepared, as your advisor, to do what we can to recover the situation. This does include, again on a without prejudice basis without any admission of liability, the option of completing the necessary financial and tax reports/documentation and a contribution towards your payments to the Inland Revenue. We would also be prepared to, at our cost, seek recovery of the amount paid to the entity concerned. We are happy to discuss this offer with you in greater detail once the total liability is confirmed by the Inland Revenue.

It is clear from Mr Rowley’s evidence that this was a “generic” letter and was received by other clients also. Examples were in evidence (e.g. for the Esk companies and Ms Skiffington).

Mr Rowley confesses to Mr Pearson

[128] In due course the Harding Electrical directors sent the disclosure documents provided by Mr Rowley to Mr Pearson. He reviewed them. He was surprised at their content, because they were inconsistent with the explanation that had been given to him by Mr Moloney and, more particularly, by Mr Rowley. On 8 October

2010, after the disclosure had been signed, Mr Rowley came to Mr Pearson’s office.

I quote from a letter written by Mr Pearson to the Revenue ten days later:

On 8 October 2010 I was able to meet with Mr Rowley; he admitted:

(a) Case Marlow Limited and Mercer Trading Company Limited had issued invoices for supplies that were never made; and

(b) Case Marlow Limited and Mercer Trading Company Limited had returned about 75 per cent of the payments to Harding Electrical Limited in some form other than taxable income.

33 See [329].

The letter goes into more detail, but that is the gist of it.

[129] In evidence Mr Pearson was absolutely clear as to the admission by Mr Rowley that the prior explanation given by him was false, and that the invoices were false. It was put to him that Mr Rowley had maintained there was a legitimate basis for the Mercer Trading invoices, perhaps based on entry into carpark licences. Mr Pearson was very clear this was not so. Carpark licences or other such transactions were not suggested by Mr Rowley. His explanation was simply that there were in fact no supplies made. Had the position been that supplies had been made, but not in the form appearing on the face of the invoice, full reversal of the tax position may not have been necessary. The tax position might yet have been defensible. Mr Pearson was clear that the explanation given to him by Mr Rowley did not leave open the possibility that the invoices were simply incorrectly described on their face, but that genuine supplies of a different kind had been made.

[130] Because of the volte-face involved, and because he had written the letter referred to earlier soon after, Mr Pearson had reason to be clear on this.

[131] Mr Rowley’s explanation, on the other hand, was unsatisfactory. This was

his evidence as to whether he had given two different stories to Mr Pearson:

Mr Rowley: No that’s not correct. I did not give him two stories.

Mr Lennard: Why do you think he would say that you did?

Mr Rowley: Ah, I think, um, they’ve obviously gone through a section 19 meeting, um, the problem with a section 19 is that whilst you waive your right to silence, um, but whatever you say cannot be used against you in a Court of law, it’s sort of the reverse from the criminal arena, et cetera, and I think it was an effort to explain why there were different versions going on between the two parties. I don't think it was Mr, ah, um, it’s a combination between the two, between the, ah, his clients and himself as well, but if you

– just reading, when we were preparing for this case, the section 19 and the voluntary interviews, they certainly did swap things round and it didn’t,

wasn't consistent, so the easiest way, I guess, is to point the finger in a

certain regard. That’s only in my opinion.

Mr Rowley then gave evidence under cross-examination that he had not discussed the Mercer Trading transactions (relating to the carparking licences) with Mr Pearson at all. This followed:

Mr La Hood: If there was no discussion by you of the Mercer Trading transactions, at all, with Mr Pearson, there's no possibility of him being mistaken or mistaking your description of what was meant to occur in Mercer Trading with what was meant to occur in Case Marlow is there? It simply can't have been a mistake by him when he met with you about what you were describing can it, because you didn't mention Mercer Trading?

Mr Rowley: Well he’s clearly added it in as a number 11 on his letter here

hasn't he? As an afterthought by the looks of things.

La Hood: The point is you had no occasion to describe to him, on your evidence, that his supplies and the invoices might be for something different than what they described so he simply, on your evidence, must have made up any reference at all to any supply in an invoice that wasn't accurate?

Mr Rowley: Well I don't know what he’s done in his head to be quite, quite honest. ...

[132] I accept Mr Pearson’s evidence as truthful and correct.

Conclusion

[133] I am satisfied beyond a reasonable doubt that counts 5 to 12 have been proved by the Crown. Specifically:

(a) the invoices described above were generated by the accused in the course of a common enterprise;

(b) there was no genuine underlying supply for the invoices;

(c) the accused knew that the invoices would be used by Harding Electrical to justify income tax deductions and claims for GST input credits, and thereby obtain a pecuniary advantage;

(d) the accused acted dishonestly in facilitating the deductions and credits claimed by Harding Electrical, and the pecuniary advantage thereby obtained by it.

Country Theme Franchise Limited – tax and GST returns – counts 30 to 32

[134] Chronologically the next transactions involve a company called Country Theme Franchise Limited. These transactions appear to have occurred around September 2006. So I will deal with that client before I deal with the counts 13-29 involving the Esk group of companies.

[135] The accused face three counts in relation to the tax affairs of Country Theme Franchise Limited. Counts 30 and 31 concern Country Theme’s September and November 2006 GST returns. Count 32 concerns its 2006 income tax return.

Background

[136] Country Theme is a furniture retailer based in Auckland and Wellington. It began in 1990 in Wellington. Ms Anna Spota is the company’s director, and one of its shareholders. She gave evidence. TPS had been the company’s accountants since

1992. The accused Barrie Skinner was Ms Spota’s principal point of contact. Even after moving to Auckland in 2000 Ms Spota continued to use TPS and Mr Skinner to prepare financial statements, and to prepare and file GST and income tax returns.34

A standard annual fee was agreed.

[137] During the 2006 and 2007 tax years the company was doing well. It was facing a substantial tax liability. Ms Spota’s evidence was that she had a meeting with Mr Skinner. She said that Mr Skinner suggested that the tax liability could be reduced by “using a company with losses”. She understood the losses were held by a company under his direction. She was clear that Mr Skinner explained the proposal in those terms.

_{[138] Following the meeting Ms Spota received two invoices from Mr Skinner.}

34 In 2009 Ms Spota changed to an Auckland accounting firm, Gilligan and Associates.

Invoices

[139] The first invoice is dated 29 September 2006, from a company called Urban Consultants Limited. We know it to be a company directed by Mr Skinner and owned beneficially by the accused’s trusts. The invoice was for $138,500 plus GST of $17,312 (totalling $155,812). The narration refers to professional advice in relation to “analysis of current group value and advice on restructuring”.

[140] The second invoice is on the same date, but from MMBD Limited. Its control and ownership are the same essentially as for Urban Consultants.35 The invoice was for $141,150 plus GST $17,643 (totalling $158,793). The narration refers to professional advice for “analysis of time frames to achieve commercial viability and potential risk involved with all ventures under consideration”.

[141] Mr Skinner accepted in evidence the invoices were both prepared at his direction.

[142] Although both invoices are dated 29 September 2006, and although both were paid on 12 October 2006 (confirmed by Ms Spota’s handwriting on the two invoices), they were expensed in the 2006 (rather than 2007) tax year. In the result the Country Theme Franchise accounts for the 2006 year showed “subcontractors” of

$280,188 – the two invoiced amounts (GST-exclusive) plus a small additional amount. The effect of expensing those invoices was of course to substantially decrease the assessable income of the company. The net effect was to reduce the net trading profit from $283,917 to just $3,729. Company tax was paid on the latter, rather than the former, figure.

Payments, repayments and distributions

[143] The two invoice payments were received in the TPS trust account on 11 and

12 October 2006. On 11 October 2006 $212,500 was remitted to the account of

_{Country Theme Franchise Limited. (That is 76 per cent of the GST-exclusive}

35 The beneficial ownership is in different proportions.

components of the invoices.) That left some $102,105 behind in the trust account. On 12 October 2006 distributions were made from the trust account to the accused’s personal accounts. Mr Rowley received $15,500, and Mr Skinner $46,500 (i.e., again, three times Mr Rowley’s payment).

What were the invoices for?

[144] In cross-examination, Ms Spota accepted that a substantial amount of work had been done for her by TPS by October 2009. She thought it might have been about $100,000. It was put to Ms Spota in cross-examination that the two invoices (and a third not directly in issue but the same amount as the Urban Consultant bill) were part of a complex scheme in which she would meet unbilled services provided by TPS and (at the same time) enter into a property investment in conjunction with the accused acquiring part of the St George Hotel building on the corner of Willis and Boulcott Streets. Ms Spota accepted that: (1) as a part of that transaction she received money from an entity associated with Mr Skinner (the Tom Munchener Trust); (2) she had been informed by Mr Skinner that she was a beneficiary of that trust; (3) she had used that money to acquire the fifth floor of the St George Hotel

building, in which the accused also had investment interests;36 and (4) that she could

not be sure whether the Urban Consultants and MMBD invoices had been expensed in the 2006 accounts. She left that up to TPS and Mr Skinner, as her accountant.

[145] She was however clear that the result of paying the invoices was that it decreased the 2006 profit of Country Theme. She also understood that the effect of the delta between what she paid and what she received back was to wipe out her indebtedness for unbilled services from TPS at the time of payment.

[146] Mr Skinner produced time sheet data for TPS for entities associated with Ms Spota for the period 1 March 2003 to 31 March 2010. This showed total time billed and unbilled compiled in relation to these matters of approximately of

$465,000. The Crown challenged the veracity of the time sheets and suggested they

_{had been inflated. I regard that challenge as inconclusive. I am prepared to accept}

36 Ms Spota had committed to that purchase in July 2005. The trust distribution took place in

October 2006.

that a substantial amount of work was undertaken for Ms Spota which was not billed under the standard arrangement. Precisely how much I cannot determine from the evidence put forward by either party. Mr Skinner’s evidence was that the work done by TPS was billed by Urban and MMBD as those entities were used for TPS property-related projects work. A further reason given by him in his evidence-in- chief was:

Mr Lennard: Mr Skinner what – are you able to justify why work done by

Tax Planning Services was charged through Urban Consultants and MMBD?

Mr Skinner: First of all, [there was common] shareholding for all three companies so it was within the same group of companies and if – we were also concerned that if there was any legal obligation if there was any way that any of the parties may have been sued for any particular reason we wanted to limit the obligations with those other two companies. That was the only reason. But the time and cost was recorded through Tax Planning.

[147] Mr Skinner accepted that the invoices would have resulted in tax deductions and GST input credits claimed by Country Theme. On the other hand, he said Urban Consultants and MMBD had paid income tax and returned GST in the usual way. That may be so, but it is beside the point for two reasons. The first is that the question here is whether by documentary means the accused have dishonestly enabled any person – including Ms Spota’s company - to obtain a pecuniary advantage it should not have obtained. Secondly, I note that in the relevant year while Urban Consultants appears to have generated income of $704,000, its deductible expenses were $699,000. That left a taxable profit by way of assessable income of only some $5,000. Whether the expenses were legitimate or not cannot be said. But the question of whether the invoicing entities declared and paid tax on the amounts invoiced is really beside the point. The evaluation here is not a matching exercise.

[148] The deed of appointment making Ms Spota a discretionary beneficiary of the Tom Munchener Trust37 was not in evidence. Previous deeds of this kind were produced for Ms Ertel and Mr Wilson. These involved trusts making an advance by way of loan, thereby returning part of the purchase price of the supposed carpark licences on an interim basis. But in this case the distribution by Tom Munchener

_{Trust, Mr Skinner confirmed, was a distribution of capital. It was not an advance. It}

37 See [144].

was not a loan. Ms Spota used the money to purchase a floor in the St George Hotel building from a Joyce Group company, Dermac Holdings Limited.

[149] I find it impossible to rationalise the basis for such a distribution, unless the reality is that the two bills, said to be based on genuine time and cost compiled by TPS through its associated entities Urban Consultants and MMBD, were simply inflated. That, of course, is the Crown stance on them. Indeed its stance is that there was no underlying supply of any kind for which Ms Spota had not yet been billed. That I think puts it too high. But I have no doubt on the evidence that I heard that the two bills were substantially inflated, and the capital distribution by the Tom Munchener Trust is a piercingly clear insight into what in fact was going on. It was not masked, on this occasion by the trappings of a loan, as the other trust distributions we have already dealt with were. I asked Mr Skinner about that:

The Court: Do you see how irrational that seems to an ordinary outsider? ... If the original invoice is genuine ... but then two thirds of it gets cycled back through a distribution by a discretionary trust, it’s really hard to understand what’s rational about that.

Mr Skinner: Yeah, okay. Well it was an incentive to put that, along with additional capital, to invest in joint ventures, and I can’t recall if it was going to be a joint venture for that particular one, which I know was one we discussed, or it was for – there was an apartment block development in, our, Molesworth Street, which we looked at as well, but we did look at several together. But in the event, the end, she elected to invest in level 5 with a capital return from the vendor as a buyer on that particular contract which seemed to be – I hear what you are saying but, umm, the intention was to do a joint venture development, but in the end the, what transpired was two separate purchases.

Conclusions on counts 30 to 32

[150] Having heard the evidence of Ms Spota on the one hand, and that of the accused on the other, I prefer the evidence of Ms Spota where in conflict with that of the accused. I do not find that either invoice rendered was a genuine invoice for fees truly due and owing by Ms Spota. Rather the amount was an inflated figure conceived by the accused to enable Ms Spota’s business to substantially reduce its assessable income in 2006 and 2007.

[151] I am satisfied beyond a reasonable doubt that counts 30 to 32 have been proved by the Crown. Specifically:

(a) the invoices described above were generated by the accused in the course of a common enterprise;

(b) there was no genuine underlying supply for the invoices for the amounts specified as payable;

(c) the accused knew that the invoices would be used by Country Theme to justify income tax deductions and a claim for GST input credits, and thereby obtain a pecuniary advantage;

(d) the accused acted dishonestly in facilitating the deductions and credits claimed by Country Theme, and the pecuniary advantage thereby obtained by it.

Esk Contractors Limited – tax and GST returns – counts 14 to 19

Esk Group Limited – tax and GST returns – counts 20 to 29

[152] Chronologically next, with payment and repayments starting in January 2007, come Esk Contractors Limited and Esk Group Limited. These charges also involved a new player in the arrangements made by the accused – a company called MCK Holdings Limited (MCK). Its principal was Ms Miize Madondo.

[153] The accused face 16 counts concerning the tax affairs of Esk Contractors and Esk Group. Counts 14 to 15, and 17 to 19 concern GST returns by Esk Contractors between February 2007 and April 2008. Count 16 concerns its 2007 tax returns. Counts 20 to 22 and 24 to 28 concern Esk Group’s GST returns between July 2007 and September 2009. Counts 23 and 29 concern Esk Group’s tax returns for the

2008 and 2009 years.

Background

[154] The governing director and principal shareholder of Esk Contractors Limited (Esk Contractors) and Esk Group Limited (Esk Group) is Mr Ted Roberts. He is now retired. He was a general contractor in the Hawkes Bay for some 35 years. Esk Contractors focused on cartage of by-products from the Whirinaki timber mill. Esk Group focused on a scrap metal business. Mr Roberts was no doubt a good contractor. Certainly his financial statements show that he was a successful one. But he has no idea how computers work, and little idea how accounts work. His recollection of his dealings with the accused, more particularly Mr Skinner with whom he dealt most, was parlous.

[155] After his previous accountant retired to grow olives, Mr Roberts approached Mr Skinner. He did so on the basis of a friend’s recommendation. He placed his trust in Mr Skinner. As he put it, “I made the money, he advised me what to do”. Mr Skinner and TPS did all his accounting work: financial statements, tax returns and GST returns. Mr Roberts and Mr Skinner would meet in the Hawkes Bay five or six times a year.

[156] The 2008 accounts for Esk Group (the scrap metal side of the Roberts group) expensed sub-contractors in the sum of $289,514. In 2009 $441,452. In evidence Mr Roberts confirmed the business did not have sub-contractor costs of anything like that amount. His sub-contractors were casual labourers. Up to seven men a week, paid about $10 an hour. Nothing like $289,000 per annum, let alone $441,000 per annum.

[157] In evidence were four invoices from MCK. It was incorporated in May 2005 by TPS, with Ms Miize Madondo as sole shareholder and director. Her “residential address” is given as TPS’s Ghuznee Street, Wellington, office premises. That was also its registered office. The name of the company changed to Momentum Consulting Kinetics Limited in May 2008. The postal address shown in each of the four invoices is a TPS PO Box address.

[158] It is necessary now to pause for a few paragraphs to discuss Ms Madondo.

Ms Madondo

[159] Ms Madondo is Zimbabwean. She lived in New Zealand between November

2000 and December 2007. The Crown sought to call Ms Madondo’s evidence, but its attempts were unavailing. Ms Madondo had returned to Zimbabwe and declined to cooperate. Her sister, Mandy Madondo, however is resident in Wellington. Until recently she has been an immigration officer with the Department of Labour. She gave evidence. I ruled that in the circumstances she could give oral hearsay evidence of statements made to her by her sister Miize. Other documentary business record evidence was also before the Court concerning Miize Madondo, including bank statements and employment records.

[160] From this evidence the following is clear. Ms Miize Madondo came to New Zealand hoping to take up a university studentship, but could not afford to do so. Her only formal education was at high school level. She had secretarial experience before coming to New Zealand. In New Zealand she became a care giver and obtained other work of a factory or warehouse kind. In November 2006 she was selling lingerie. It is likely that at some time she entered a personal relationship with Mr Skinner. Emails in evidence suggest that was the case. As a result her circumstances improved. Instead of the small car she drove when she was a lingerie saleswoman in 2006, for the balance of her time in New Zealand (up to December

2007) she drove a BMW. She had money to spend. The source of her money was her partner, said by her to be “Barrie”. In the circumstances I have little doubt that it was Mr Skinner. Ms Madondo senior confirmed that her sister had, to her knowledge, no property experience, and she had neither the experience nor the money to be involved in property development. She did not have access to significant funds from Zimbabwe.

[161] All reliable evidence suggests that Ms Madondo was not a woman of any substance whatever. Her lingerie business went by the name of Kumbie Elegance Limited. Its bank records were obtained under s 17 of the TAA and were put in evidence. Income from sources other than entities associated with the accused was

negligible. Little lingerie it seems was being sold. Emails were produced by Mr Rowley from TPS files from Baycorp seeking payment from TPS on behalf of Ms Madondo of $7,128 for outstanding bills due to Vodafone, Clear, Canterbury Caterers, Christchurch City Council and Telecom. In addition, despite the fact that Ms Madondo was supposedly presenting herself to the accused as a woman of substance from whom $4 million funding lines would be available to fund the

accused’s BRMVR Holdings Limited,38 she was herself looking for mezzanine

funding from another client of TPS, AAA Finance Limited. We will meet AAA Finance and its director, Mr Patel, later.39 But in 2006 or 2007 she borrowed about

$70,000 from him. He understood it was to be used as bridging finance. The loan, Mr Patel said, was “a fatal error of judgement”. He had great difficulty obtaining repayment.

[162] In these circumstances Ms Madondo’s lack of real financial substance would have been evident to Mr Skinner, whether he was in a personal relationship with her or not. It may, I accept, have been less clear to Mr Rowley. His evidence was that he had never met Ms Madondo. It appears that for most of the time she was in New Zealand she lived in Auckland. Mr Newman did meet her on a few occasions. Mr Skinner gave evidence that Ms Madondo had generated a significant level of apartment pre-sales for the St George O’Reilly development. The accused called a Mr David Cunningham to corroborate that. He was a director of the company that owned the adjacent St George Hotel building. Mr Skinner said he had taken Ms Madondo through that building. Mr Cunningham’s evidence was that he had indeed shown a woman of African ethnicity through his building. He described the woman. However when cross-examined by Mr La Hood and shown a photograph of Ms Madondo, his evidence was that the woman he had shown through his building was not Ms Madondo at all, but a larger and older woman.

[163] The last point I need to note about Ms Madondo is that it was said by both accused that habitually she sent MCK’s invoices (either from Auckland or from overseas) to them on disk, relatively difficult to change, and narrated as

_{“subcontracting” or “project consultancy”. Their evidence was that this was the}

38 _{See at [350].}

39 See at [284].

wrong description for what were in fact invoices for deposits for real property transactions or the payment of brokerage. Ms Madondo’s habit of misdescribing the supply was a source of frustration to them. I note three points in relation to that. The first is that many invoices with narratives showing “consultancy” or “project consultancy” or “subcontracting” originated with companies other than Ms Madondo’s MCK Holdings. Mercer Trading, P&L Sharp Limited, Marsden No

2 Trust and Case Marlow all issued invoices in those terms, albeit it is now said the supply was otherwise. Those entities had nothing to do with Ms Madondo. Second, there is evidence that many of those invoices (i.e. from entities other than MCK) were generated by the accused Mr Rowley. Third, he too appears to have generated some MCK invoices. Forensic evidence from Mr Heard showed that Mr Rowley’s computer was used to generate invoices by MCK to Esk Group, Scotty’s Construction, Strategic Directionz, Conaghan Consulting and AGI Motor Sports. These other clients I will discuss later in these reasons.

Invoices

[164] Each MCK invoice appears to have formed part of the Esk Group sub- contractor expenses in its final financial statements. There is one in the 2008 tax year, dated 31 March 2008. It is for “project consultancy work for the period ended

31 March 2008” and is for $61,184 and GST of $7,648 (totalling $68,822). The invoice then states that $46,500 has been paid, leaving a balance due of $22,332. In blue pen, beside the amounts said to have been “paid”, is the note “76%”. $46,500 is indeed 76 per cent of the GST-exclusive component of the invoice, $61,184. The handwriting appears to be that of Mr Skinner. The 76 per cent fraction we have seen

earlier: the repayments to Country Theme.40

[165] There are then three invoices for the 2009 year. Each again is said to be for

“project consultancy work”, for different periods. They total $282,979 plus GST

$35,372 ($318,351). Again in each case the invoice shows on its face that amount has been paid. In two cases the amount shown is 76 per cent (and in one of those the

_{same blue pen notation appears beside it); in the other case the amount noted as paid}

40 See at [143].

is 70 per cent. Forensic evidence from Mr Heard indicated that two of three invoices

had been generated, on Mr Rowley’s computer, from Word document templates.

Payments and repayments

[166] Analysis of flow of funds between the Esk companies and TPS shows a larger number of transactions than the invoices in evidence suggest. On 10 January

2007 Esk Contractors paid $88,875 to TPS, and received back the same day $60,000 from the TPS trust account. Second, on 9 March 2007 Esk Contractors paid

$127,068 to TPS and received back $85,832. Third, on 27 August 2008 Esk Group paid TPS $67,500, and received back $45,600. Fourth, on the same day Esk Contractors paid TPS $73,383, and received back $49,000. Fifthly, on 4 September

2007 Esk Contractors paid TPS $64,631 and received back $44,000. Sixthly, on

2 November 2007 Esk Group paid TPS trust account $88,740 and received back precisely $60,000. Seventhly, on 6 March 2008 Esk Contractors paid TPS $191,250 and received back $130,000. Eighthly, on 6 March 2008 Esk Group paid TPS

$36,788, and appears to have received back $25,000. Finally, on 7 July 2008 Esk

Group paid $23,965 to the TPS trust account and two days later $22,332.

[167] This last payment seems to relate to the 31 March 2008 invoice discussed earlier. It is an example of just the residue to be retained by TPS (possibly for payment on to MCK) being paid, rather than payment of the face value of the invoice with remittance back of the major part.

Distributions to accused

[168] Evidence of distributions followed the pattern shown earlier of payments in proportions 3:1 from proceeds retained from the unremitted portions of client payments. For instance, as we have already seen, on 9 March 2007 Esk Contractors paid $127,068 to TPS. On the same day three payments were made: $85,832 back to Mr Roberts, $36,000 to Mr Skinner and $12,000 to Mr Rowley. There are other examples. Following substantial payments by Esk Group, SS Transport Limited, Topline Tailors Limited and AAA Finance Limited on 8 November 2007, Mr Rowley received $60,000 and Mr Skinner’s TPS Asset Trust $180,000. A

similar thing occurs on 7 March 2008 when Mr Skinner receives $120,000 and

Mr Rowley $40,000.

What were the invoices for?

[169] Mr Roberts did not know who MCK was. He had not obtained “project consultancy” work from MCK, contrary to the terms of the invoices. He could not recall what if anything he had got from Case Marlow.

[170] It was plain in his evidence that Mr Roberts had little idea of what these transactions related to. He recalled making the payments. He said he was asked to make them by Barry Skinner. When asked why he made them he said he thought it was something to do with a company swap around, and “a bit of land”. He did understand that he was investing in at least one apartment, initially in Nelson and then later in Boulcott Street, Wellington. He thought that a deposit was being paid, and then on completion he would get a return of 10-15 per cent on the deposit. He was clear that in entering into all the transactions he relied on the advice of Mr Skinner.

[171] Mr Roberts was shown an unsigned agreement for sale and purchase of a property called Block 1, Nikau Apartments, Nelson. The vendor is shown as MCK, the purchaser as Esk Contractors. The purchase price in the agreement was

$2,490,000 with a deposit of $996,000. Mr Roberts thought he had seen it before, but could not recall if he had ever signed it. A second, incomplete agreement, was put to Mr Roberts. It is called an “agreement to buy on payment of deposit service invoices”. Again the vendor was MCK, but this time Esk Group was the purchaser (with Mr Roberts as guarantor). It related to the sale of two units in the proposed St George O’Reilly development by MCK as broker and agent for an unnamed vendor (called, simply, “the Developer”). It is an unusual form in which to convey interests in land in this country. A purchase price of $3,460,960 was prescribed, with a “service fee deposit” of $865,740. Of that, 24 per cent was to be non refundable to cover various fees and margins. Both documents are dated in 2007. Mr Roberts confirmed that he had seen this document before, but it was a long time ago and he

could not remember whether he had signed it. I did not find Mr Roberts’ evidence as

to prior knowledge of either agreement reliable.

[172] The MCK/Esk contract concerning the Nelson student accommodation was also the subject of expert evidence as to its creation date. The accused’s expert evidence suggested a creation date to the hard drive of 4 March 2008. Mr Winter’s evidence in reply, analysing the USN log on the hard drive, however, showed that this was another document where the March 2008 time stamp was the product of the source computer’s clock being altered back to March 2008, while in fact being connected between 24 and 27 April 2012.

[173] It is clear, in any case, that some of the invoices have been used by TPS (under Mr Skinner’s direction) to justify “subcontractor” expenses of $289,514 in Esk Group’s 2008 accounts and $441,452 in 2009. Neither figure was true. Each figure was used to calculate income tax payable by Esk Group for those years.

Voluntary disclosures

[174] After the investigation into TPS’s affairs began, Mr Roberts signed three voluntary disclosures about his companies’ tax returns. His evidence was that each of these was given to him by Mr Skinner and signed by Mr Roberts on Mr Skinner’s advice. The first, dated 31 September 2010 is on behalf of Esk Contractors. It discloses a transaction entered into between Esk Contractors and Case Marlow. That is not a transaction otherwise in evidence. Mr Roberts accepts an error in relation to the payment of $215,943, of which $145,850 was refunded to the taxpayer. It admits an improper income tax deduction claimed at $191,950 in the year ended

31 December 2007. It admits improper GST inputs claimed of $9,875 in February, and $14,118 in April 2007. Deductions and inputs were all now to be zero.

[175] The second voluntary disclosure, signed by Mr Roberts on the same date, and again on Mr Skinner’s advice, relates to a transaction entered into between Esk Contractors and MCK. In it Esk Contractors admits error in relation to payment of

$329,265, of which $240,200 was refunded. Reversed adjustments were as follows:

income tax deductions in the 2007 year of $292,680 (now to be $0) and GST

adjustments for May of $8,153 ($0), October 2007 $7,181 ($0) and April 2008

$21,250 ($0).

[176] The third disclosure is on behalf of the other company, Esk Group. It relates to a transaction entered into between that company and MCK. There the tax payer admits error in relation to the payment of $684,230.93, of which $422,500 was refunded. Reversible tax deductions were $171,580.53 in the 2008 tax year (now

$0) and $436,624.74 in the 2009 tax year (now $0). GST inputs claimed (but now reversed), starting with July 2007 and ending with November 2009, totalled

$76,025.66 (now $0).

[177] In the present case, where there is a multiplicity of invoicing and it is more difficult to trace the invoices in a direct sense to the taxpayer’s financial statements (and thereby to their tax returns), the voluntary disclosures assume particular importance. I have already said that where disclosures were entered at the recommendation of the accused, on terms provided or approved by the accused (both of which apply here), they are relevant to the question of whether there was a genuine underlying transaction or not. My clear conclusion in the present case is that there was no such genuine supply.

Conclusions on counts 14 to 16 and 18 to 29

[178] I am satisfied beyond a reasonable doubt that counts 14 to 16 and 18 to 29 have been proved beyond a reasonable doubt.

(a) The invoices produced in evidence were generated by the accused in the course of a common enterprise.

(b) There was no genuine underlying supply for the invoices and other payments described in the voluntary disclosures tendered by Esk Contractors and Esk Group.

(c) The accused knew that the invoices and payments would be used by the

Esk companies (as a consequence of the resultant financial statements

prepared under their direction) to justify income tax deductions and claims for GST input credits to which they were not entitled, and thereby obtain a pecuniary advantage.

(d) The accused acted dishonestly in facilitating the deductions and credits claimed by Esk Contractors and Esk Group, and the pecuniary advantage thereby obtained by them.

Count 17

[179] I am not satisfied beyond a reasonable doubt that count 17 has been proved by the Crown. It is not substantiated by the voluntary disclosures submitted by Esk Contractors, and prepared by the accused. Accordingly the accused are acquitted of count 17.

Pipitea Street Developments Limited – tax returns – counts 33 to 34

Lorraine Skiffington – tax returns – counts 35 to 38

Strategic Directionz Limited – tax and GST returns – counts 81 to 84

[180] Next in order of event are counts relating to the tax affairs of Ms Lorraine Skiffington and two companies associated with her, Pipitea Street Developments Limited and Strategic Directionz Limited.

Background

[181] Ms Skiffington was once a Hamilton school teacher. In 1996 she requalified as a lawyer. Since that time she has worked in Wellington as a senior civil servant (including as a Ministerial adviser) and more recently as a private consultant in the areas of public law and policy, with particular reference to Treaty settlement work. She is also an experienced property investor, having developed with a previous partner a portfolio of some 14-15 residential properties in Hamilton. Initially Mr Stevens was her accountant. She and Mr Stevens shared offices over one point.

[182] In the course of her association with Mr Stevens, he introduced Ms Skiffington to Mr Skinner. The contract was initially social. Then Mr Stevens dropped the ball in relation to her affairs, following the departure of a staff accountant, and Ms Skiffington decided to move her accounting work to TPS. Mr Skinner took primary responsibility for her work, but she also had contact with Mr Rowley from time to time. She understood Mr Skinner to have prepared her financial statements. He also undertook preparation of her income tax returns, provisional tax payments and GST returns. For that she was billed on a monthly basis.

Counts 33-34: Pipitea Street Developments Limited

[183] Chronologically first in time is a transaction involving Pipitea Street

Developments Limited (PSDL) and a GST return filed on 9 February 2007. Counts

33-34 concern PSDL’s 2007 income tax return and its January 2007 GST return.

[184] PSDL was owned beneficially by Ms Skiffington and Mr Stevens in equal shares. It entered into a service agreement with interests owned by Auckland property developers Kerry Knight and Tony Gapes. Under that arrangement PSDL was to receive a service fee of $3 million. The first $1.5 million was to be received by Ms Skiffington; the second by Mr Stevens. It is unclear exactly what services PSDL, Ms Skiffington and Mr Stevens were providing. Ms Skiffington said that Mr Stevens did very little in fact, which is why his share was postponed. It seems likely it was never paid to him. Similarly opaque is precisely what Ms Skiffington did. Her evidence on this was vague:

Mr La Hood: And what was the consultancy work you did?

Ms Skiffington: A range of, umm, services umm, relating to the negotiation of land acquisition and the development itself, working with Wellington City Council regarding resourcing processes, working to procure tenants for, umm, the buildings that were developed, going into negotiations with, umm, Kerry Knight and Tony Gapes was a whole range of prospective government tenants. My experience around government helped me to assist a lot in that sense.

[185] Emails between Ms Skiffington and Mr Knight in February and March 2008 were put to Ms Skiffington in cross-examination. They suggest that the fees were

for “consultancy and management services” for Wellington Tenths Trust projects in which the Knight/Gapes entities had, or were seeking, an involvement as co- developers. It was put to Ms Skiffington in cross-examination that the payment was a secret commission paid to her and her partner, the chairman of the Tenths Trust. She denied that the payment was a secret commission:

Mr Lennard: I put it to you that you were very keen to put the money through Tax Planning Services companies in order to conceal the money flow from Mr Stevens, from anyone who might be interested in the Tenths Trust?

Ms Skiffington: Absolutely not.

That is not a matter I need to resolve. The question for me is whether the accused were knowingly involved in the filing of unsustainable tax returns by Ms Skiffington and other taxpaying entities associated with her.

[186] On 31 January 2007 PSDL’s Westpac account was credited with $1.4 million. This sum appears to have come from a Knight/Gapes entity. The PSDL account was debited the same day with four payments totalling approximately $1.5 million.

[187] These four payments exactly accord with four invoices dated November or December 2006 issued by “P L Sharp Limited”,41 Marsden No 2 Trust and High Street Trust. As we have seen, these entities are all associated with the accused. The PO Box addresses on each invoice was a TPS PO Box address. I am satisfied that all were controlled by the accused at the relevant time. The invoices appear to have been generated by Mr Rowley. On 29 January 2007 he sent them by email to

Messrs Skinner and Stevens.

[188] The four payments were then received into the TPS trust account. On the same day, 31 January 2007, two payments totalling $1.02 million were made from the TPS trust account to the joint personal account of Ms Skiffington and her partner, Sir Ngatata Love. And two further payments were made. First, $202,500 to the account of Mr Skinner’s trust, the TPS Asset Trust. Secondly, $67,500 (again in a

_{3:1 ratio) to the account of Mr Rowley’s trust, the TPS Asset Trust No 2.}

41 In fact the correct company name is P & L Sharp Limited. The invoices are incorrectly headed.

[189] Mr Skinner gave evidence concerning this transaction. His evidence was that either the PSDL service contract, or the benefit of that contract, was assigned to P & L Sharp Limited to enable Ms Skiffington to unwind the arrangement with Mr Stevens (and in particular to defeat Mr Stevens’ expectation of the second $1.5 million fee) or to conceal its true nature from the Tenths Trust. Mr Skinner said:

Mr Lennard: Did she explain why she wanted it assigned to a Tax Planning

Services Company?

Mr Skinner: Something to do with the transactions where the property was – or the land surrounding the property was something to do with the Wellington Tenths Trust in that she didn’t want the transactions directly notified, is my recollection. It was something to do with the transfer of the funds back for her to acquire a property.

Mr Skinner said he had a meeting with Mr Knight regarding transfer of the agreement. He said that P & L Sharp Limited was now to invoice Messrs Knight and Gapes, and did so.

[190] I did not hear from either Mr Knight or Mr Gapes. But Ms Skiffington starkly refuted the claim – put squarely to her by Mr Lennard in cross-examination – that such an assignment had occurred. No documentary basis for the alleged assignment was before me.

[191] I am satisfied beyond a reasonable doubt that counts 33 to 34 have been proved by the Crown. The invoices were generated by the accused in the course of a common enterprise; there was no genuine underlying supply; and they knew the invoices would be used by PSDL to justify income tax deductions and GST input credits to which they were not entitled.

Counts 35 to 38: Ms Skiffington’s returns

[192] These counts concern Ms Skiffington’s personal tax returns for the 2006 to

2009 tax years (four years). The first of those returns was filed on 31 March 2007.

[193] Ms Skiffington’s tax returns were based on financial statements prepared for her by TPS, under the guidance or control of Mr Skinner. Those financial statements referred to “consultancy” or “subcontracting” charges which substantially deplete the

gross income otherwise earned by Ms Skiffington. In evidence she confirmed that she did not have “consultancy” or “subcontracting” charges of the levels stated. Gross income of $372,406 in the 2006 tax year was largely obliterated by $332,121 “consultancy” and “subcontracting” expenses. In 2007 $435,890 gross income was depleted by $231,000 “consultancy” expenditure. 2008’s $496,199 was reduced by

$217,320. And 2009’s $483,247 was reduced by $211,647. Ms Skiffington was clear in evidence that these expenses were not genuine. The essential question is what, if any, role the accused had in knowingly contributing to the expression of false assessable income levels in Ms Skiffington’s 2006 to 2009 income tax returns, that being the subject of counts 35 to 38.

[194] The Crown has not been able to produce invoices generated by the accused or entities under their control relating to Ms Skiffington’s personal tax affairs. However, Ms Skiffington identified in evidence a series of payments made by her to the TPS trust account:

(a) 2007: On 7 March 2007 Ms Skiffington made four payments totalling

$218,734 to the TPS trust account (for the Marsden No 2 Trust). On the same day $194,430 was returned to her. Her cheques were deposited by Mr Skinner.

(b) 2008: On 31 August 2007 Ms Skiffington made a payment of $183,825 to the TPS trust account, and received back $124,000. That payment was deposited by Mr Rowley. On 7 March 2008 Ms Skiffington made four payments totalling $179,752 to the TSP Trust account. She received back

$121,432. Mr Rowley deposited those cheques.

(c) 2009: On 29 October 2008 Ms Skiffington made two payments to Case Marlow totalling $179,100. She received $121,400 back. Mr Rowley deposited those cheques.

[195] Ms Skiffington was asked why she made these payments:

Mr La Hood: You’ve told us though you did pay cheques, who asked you to

pay the cheques?

Ms Skiffington: Correct, um, either Barrie Skinner or Dave Rowley. Mr La Hood: And did they tell you why you were paying the cheques? Ms Skiffington: Ah to meet tax obligations.

Mr La Hood: Did you understand what that meant?

Ms Skiffington: Well I assumed they were entities by which tax was paid through.

Section 19 summons

[196] On 13 August 2010 Ms Skiffington was summoned to a s 19 interview with the Revenue. That interview was to take place in September. On 17 August 2010

Ms Skiffington and her counsel, Phillip Green, met both accused at Mr Green’s chambers. Helpfully Mr Green took detailed notes of the meeting. Both he and Ms Skiffington gave evidence about the meeting. The meeting was convened so Mr Green could obtain information necessary to advise Ms Skiffington. The discussion was a couple of months before Mr Rowley’s confession to Mr Pearson.42

[197] It is common ground that at that meeting the accused explained that Ms Skiffington had entered into an agreement with MCK for the acquisition of apartments in the Nile Street, Nelson, student accommodation complex. The accused produced a copy of an unsigned agreement for sale and purchase dated 13

March 2007 to that effect. The purchase price was $1,765,000. A deposit of

$706,000 plus GST was payable, subject to special conditions of contract which enabled part-repayment thereof to Ms Skiffington. The accused also gave Mr Green a schedule which showed total deposits paid (excluding GST) of $674,039 (paid by both Ms Skiffington and her company Strategic Directionz Limited (SDNZ)). Of that, some $643,500 had been repaid to Ms Skiffington and SDNZ.

[198] Ms Skiffington was seriously unwell by the time the meeting was held. But in evidence she described her reaction to production of the purchase agreement (in particular) as one of being first “staggered”, and then “shattered”. She said she had never signed such an agreement. Initially she thought that she was the victim of a

_{forgery. She said she flicked desperately through the purchase agreement to see if}

42 See at [128].

there was a signature. She was relieved to see neither a signature nor a solicitor acting (her normal approach). She said that she was so stunned at this development she did not protest, but felt overwhelmed, ill and more or less tuned out from the meeting from that point. Mr Green described her as seeming to have a dreadful headache and leaving the room to obtain water. After the accused left Mr Green’s office he and Ms Skiffington conferred. She told Mr Green she knew nothing about the purchase agreement, the schedule, MCK or Ms Madondo (who had been described by the accused in some detail at the meeting).

[199] I am satisfied beyond a reasonable doubt that the MCK/Skiffington transaction was not genuine. It appears likely that the documents were created by the accused (most likely Mr Rowley) prior to the meeting in August 2010. This document was again the subject of evidence from Mr Winter, and the same observations apply in relation to this agreement as to the equivalent agreement

supposedly entered by Esk Contractors.43

[200] It is a singular feature of this case that so few of the taxpaying clients of TPS who were said to have entered into agreements to acquire carpark licences or apartments remembered having done so. It is an equally singular feature that their reactions on being told that they had were so pronounced.

Voluntary disclosure advised

[201] On 16 September 2010 – just four days before the s 19 interview between Ms Skiffington and the Revenue took place, Mr Skinner wrote to her noting the likelihood of an audit of TPS’s clients. He said that voluntary disclosure would be beneficial because the TAA provided a 75 per cent reduction in penalties otherwise imposed if taxpayers made a full voluntary disclosure before being notified of an audit. The letter went on:

Inland Revenue has made it quite clear that it believes that the transactions involving MCK Holdings/Momentum Consulting Kinetics Limited/Marsden No 2 Trust and Case Marlow Limited was in effect for tax purposes. While the Department has not made clear why it says that, it is probably because it

43 See at [172].

believes the transactions are a tax avoidance arrangement which is void for income tax and GST purposes.

[202] The letter went on to say that although TPS (“as your advisers in entering into the transaction involving MCK Holdings/Momentum Consulting Kinetics Limited/Marsden No 2 Trust and Case Marlow Limited” [sic]) could not give independent advice on the making of a voluntary disclosure, it was aware of “some independent barristers who had been advising other clients of ours in a similar situation to yours to seriously consider making a voluntary disclosure”. The letter offers no defence of the transaction (which of course concerned only MCK from the list set out). It is difficult to reconcile that letter with an extant or defensible transaction in the terms shown in the unsigned sale and purchase agreement shown (apparently for the first time) to Ms Skiffington on 17 August 2010.

Section 19 interview

[203] Four days later, 20 September 2010, Ms Skiffington and Mr Green attended her s 19 interview with the Revenue. In the course of the interview Ms Skiffington said she had not received invoices from MCK,44 had not had subcontracting services from Case Marlow or Marsden No 2 Trust and had not heard of Ms Madondo before the meeting on 17 August. She provided the Revenue with a copy of Mr Green’s notes of the 17 August meeting, and stated that she knew nothing about the sale and

purchase agreement for the Nelson apartments referred to earlier. She again confirmed that the first time she had seen that document was at the meeting on 17

August 2010. Likewise the schedule setting out the supposed deposits and repayments.

Conclusion on counts 35-38

[204] I am satisfied beyond a reasonable doubt that counts 35 to 38 have been proved by the Crown. I am satisfied that there was no genuine underlying supply for the payments made to TPS on account of Marsden No 2 Trust or Case Marlow, that the accused knew and intended that those payments would be expensed in

_{Ms Skiffington’s financial statements (which were prepared under their direction)}

44 See at [207].

and would then be used to justify income tax deductions to which Ms Skiffington was not entitled.

Counts 81 to 84: Strategic Directionz Limited

[205] These four counts concern the 2009 tax year. Three concern GST returns in that year and one the income tax return. I will deal with these counts here and now because they are associated with Ms Skiffington. Strictly they arise in the later (rather than earlier, pre-June 2007) period.

[206] SDNZ was Ms Skiffington’s consulting firm. It appears around 2008-2009 she undertook consultancy services through that company. The 2009 financial statements for SDNZ were prepared by TPS (Mr Skinner). The 2009 accounts show gross receipts of $1.27 million, defrayed by consultancy costs of $773,000 and subcontractors of $349,000 (totalling $1.12 million). Ms Skiffington confirmed there was no legitimate basis for expenses of that order being claimed.

[207] Six invoices in the relevant year were produced in evidence. One, for

$162,000, was issued by MCK. The other five were by Case Marlow. All were for “consultancy and planning services”. They totalled $442,000. Ms Skiffington confirmed she received no such services from those entities in that year.

[208] The invoices are clearly connected to the accused. Forensic evidence showed Mr Rowley’s computer was used to print the invoices, initially from Word documents into PDF format. In addition emails were produced in evidence showing Mr Rowley arranging payments in and out of SDNZ’s bank account direct with its banker.

[209] The precise amounts repaid to SDNZ are less clear than in relation to Ms Skiffington personally. However evidence before me suggested that a total of at least $791,000 had been paid to TPS or TPS related entities between October 2008 and September 2009 with same date repayments totalling $548,000. That left some

$243,000 retained by TPS.

Conclusion on counts 81 to 84

[210] I am satisfied beyond a reasonable doubt counts 81 to 84 have been proved by the Crown. The same observations apply as in the case of counts 35 to 38.

Sharon Skinner – tax returns – counts 65 to 69

[211] Before going to the next counts in their numerical order, I will deal with another client whose affairs, as with Ms Skiffington’s, extend over a lengthy period. This client is Mr Skinner’s sister, Sharon Skinner. Relevant transactions with her seem to have begun at some point in 2006, although there may have been earlier transactions not the subject of criminal charges.

[212] Counts 65 to 69 were amended by the Crown at trial, without objection by the

accused. These five counts concern Ms Skinner’s tax returns for the years 2005 to

2009.

Background

[213] Ms Skinner is a partner in the law firm DLA Phillips Fox, in Wellington. She has been a partner there since 1984. In October 2010 she was summonsed under s

19 of the Act to an interview with the Revenue. That was to take place on

11 November 2010. Before that interview occurred Ms Skinner filed with the Revenue a voluntary disclosure. It was prepared by her counsel, Mr James Coleman. However in evidence she confirmed that she had checked and approved it. It identifies various sums in her personal financial statements (prepared by TPS and used to calculate her tax liability) expensed as “consultancy” costs. These were for the five years 2005 to 2009 inclusive.

[214] Some invoices from a company called Gladlea Consultancy Limited were produced in evidence. That company is owned and controlled by Mr Skinner. There was one invoice for the 2008 year for $39,420 for an “annual consultancy fee”. That amount is exactly the “consultancy” expense shown in Ms Skinner’s 2008 financial

statements. There are also two “quarterly consultancy fees” of $9,850 each in the

2009 year.

[215] The voluntary disclosure says that she had left preparation of her financial statement and income tax returns to TPS:

Typically she would only take a cursory glance at the draft returns and often never looked at or signed them at all. This is because TPS operated the default option of filing the returns if one did not get back in touch with them.

[216] Ms Skinner is clear in the voluntary disclosure that she believed she had incurred some consultancy services, but that:

While TPS provided some general business strategy advice the payments are also part of a scheme whereby some of the fees are repaid to Ms Skinner from a trust.

The “consultancy” expenses reported for the five years concerned totalled $165,590 in the 2005-2009 years. The voluntary disclosure also disclosed some $147,950 repaid to Ms Skinner in the 2007, 2009 and 2010 years. The two figures are obviously not for matching years. Ms Skinner’s evidence was that she was receiving these distributions as discretionary beneficiary of a family trust. It was put to Ms Skinner in cross-examination that it was possible the consultancy mentioned earlier was billed by Mr Skinner through Gladlea Consultants, and that distributions received by her as a family member and discretionary beneficiary of the MVR and TPS Asset Trusts (being trusts settled by Mr Skinner). Ms Skinner accepted that these were possibilities; indeed it was “how I had understood them to be”.

[217] However, there are some difficulties with that explanation. The first is that Ms Skinner was notably vague as to what services she was being invoiced for. To take an example, Ms Skinner’s 2007 accounts (prepared for her by TPS) showed a “consultancy” expense of $38,750. She was questioned on this by Mr La Hood:

Mr La Hood: ... Can you tell us what the consultancy figure for 2007, the

$38,750 relates to?

Ms Skinner: Consultancy services.

Mr La Hood: What sort of consultancy services?

Ms Skinner: Ah, consultancy services in respect of myself personally, um, in respect of I have two family trusts and we have a company as well. The company owns a property and the trust was also, had a share in a partnership, um, and that would have been tailing off towards the end there. So it would have been in respect of looking after the affairs of all of those entities.

Then in the 2008 year, the consultancy expense was $39,420:

Mr La Hood: If I ask you again if you could tell me what those services were for and who you paid them to would you be able to assist in any more detail?

Ms Skinner: I don’t believe so, I mean, we received invoices, we paid them, um, ah, the services were given in respect of all the entities that I mentioned, um, so no I don’t really have anything to add to that.

[218] Second, there was at least a basis on the evidence in relation to some of the payments made to the TPS trust account (whether on behalf of Gladlea or otherwise, but for consultancy services) that there would be a “same day” repayment in the same manner characterising other counts already discussed. For instance, Ms Skinner’s bank statement for September 2006 showed two payments out of

$23,520 each (totalling $47,040) on 28 September 2006, and a repayment into that account the same day of $37,600 from the TPS Asset Trust:

Court: When you paid the $47,500, did you expect to receive the $37,600 from the TPS asset trust? ...

Ms Skinner: Right, right. I suppose I had developed an expectation that I

was going to be getting a distribution from the trust.

Court: At the same time that you were making the payments? Ms Skinner: More or less.

Court: Yes. Indeed, that was always the case, was it?

Ms Skinner: Ah, from memory, I think more or less, yes.

I conclude that payments and repayments were connected, and the payments (used to justify a deflated level of assessable income) were not for services (whatever they may have been) supplied at true value.

[219] Third, if there was a genuine underlying transaction involving legitimate expenses being claimed for income tax purposes, and legitimate capital distributions

from a family trust, it is very difficult to understand why Ms Skinner would have filed the voluntary disclosure referred to earlier. It is true that the voluntary disclosure states that Ms Skinner had not spoken to her brother about her tax affairs before making the disclosure. True, too, that this disclosure was not prepared by the accused. But Ms Skinner is clearly an intelligent person, with all the professional expertise that goes with being not only a solicitor but a partner in a substantial law firm. At the time of the making of the voluntary disclosure, her brother, Mr Barrie Skinner, had been arrested. In all those circumstances, I do not believe that she would have made a voluntary disclosure unless she was very sure that there was no basis for defending, from a Revenue perspective, the transactions.

Conclusion on counts 65 to 69

[220] I am satisfied beyond a reasonable doubt that count 65 to 69 has been proved by the Crown against the accused Mr Skinner. I am satisfied there was no genuine underlying supply for the payments made by Ms Skinner for the amounts expensed in her accounts as “consultancy” for each of the five tax years charged. Or at least, certainly not to the level claimed. The position is, as the voluntary disclosure itself records:

While TPS provided some general business/advice the payments were also part of a scheme whereby some of the fees were repaid to Ms Skinner from a trust.

I am satisfied that Mr Skinner knew that those inflated expenses would be used to justify income tax deductions to which his sister Ms Skinner was not entitled.

[221] The evidence leaves real doubt in my mind as to whether the accused, Mr Rowley, had anything to do with the matters the subject of these counts. I therefore acquit him of counts 65 to 69.

Leyser Enterprises Limited – tax returns – counts 39 to 40

[222] Counts 39 and 40 concern the March 2007 GST return and the 2007 income tax return for Leyser Enterprises Limited.

Background

[223] Douglas Leyser is a software developer. He is based in Havelock North. Between 1993 and 2010 he operated a company called Leyser Enterprises Limited (Leyser Enterprises). He met Mr Skinner while doing contracting work for the former Department of Social Welfare. Mr Skinner acted for a number of other people contracting to the department. Mr Leyser used Mr Skinner and TPS to prepare his financial statements and his income tax returns. He did his own GST returns.

Invoice, payment and repayment

[224] An invoice was produced dated 22 March 2007 from MCK to Leyser

Enterprises for project consultancy work in the amount of $26,551 plus GST of

$3,319 totalling the $29,870 figure referred to in the disclosure. That invoice was paid on 21 July 2007. The cheque was deposited by Mr Rowley. The same day

$20,150 was repaid to Mr Leyser. Again, 76 per cent of the GST-exclusive amount.

What was the invoice for?

[225] In evidence Mr Leyser confirmed that he did not receive project consulting work from MCK Holdings. Mr Leyser did not now recall what he thought the transaction was about at the time. He claimed to have been under “a lot of pressure” and not to have given it a lot of thought.

[226] A transcript of Mr Leyser’s interview on oath under s 19 of the TAA on

17 September 2010 was in evidence and put to Mr Leyser. In it he clearly placed the source of the transaction with Mr Skinner, but said again that he cannot remember the details of the transaction. He accepted that the main purpose of the transaction was to create a tax advantage, albeit he believed it legitimate. He had a “feeling” that it may have been introduced as a property investment, although he could not remember the details of it.

Section 19 summons

[227] Mr Leyser was summonsed to a s 19 interview with the Revenue on

17 September 2010. Before the interview he had a meeting with Mr Skinner. At that meeting Mr Skinner showed him an unsigned agreement for sale and purchase of an apartment in the proposed “Q on Taranaki Street” apartment complex (QOTS) which was to have been built on the corner of Frederick Street and Taranaki Streets. It was dated 15 March 2007 and is between MCK as vendor and “Leyer [sic] Enterprises Limited” as purchaser. It too was located on the hard drive, and had its time stamp altered in April 2012.

[228] Clause 2.1 of the agreement provides that the agreement is conditional on the vendor “obtaining by 1 June 2007 a minimum level of sales of units in the development which in the vendor’s sole option justifies completion to development”. Clause 3.2 notes that the deposit will be used by the vendor to meet costs “in relation to this development”. These are all appropriate clauses for an “off the plans” sale by a developer vendor. They are not appropriate to the on-sale of a unit by a purchaser from the developer. Mr Leyser said he did not think he had seen the document before his meeting with Mr Skinner, ahead of the s 19 interview. The copy of the agreement that Mr Leyser took to the s 19 interview had just the cover page and one page of conditions. It appears he had obtained this copy from Mr Skinner. Subsequently he arranged to obtain and provide the Revenue with a full copy.

[229] The developer of QOTS, Mr Mervyn Quirk, gave evidence. Mr Quirk was also a client of TPS, and more specifically Barrie Skinner. A separate count – count

62 – concerns the 2007 income tax return of Mr Quirk’s company, MQ Property

Services Limited.45 He confirmed that the QOTS project had not proceeded as his

12 month option to purchase the site ran out due to difficulties with resource consents and obtaining credit after the global financial crisis. His solicitor, Mr Andrew Henderson, was in charge of keeping the contracts and deposits. A very substantial number of QOTS apartments were sold off the plans. Mr Henderson took

_{the contracts and the deposits. A sales agent called Rich Mastery was primarily}

45 At [307].

responsible for sales. He could not remember any buyers being introduced to him by Mr Skinner or Mr Rowley. MCK was neither the developer nor an entity that Mr Quirk had authorised to undertake sales.

[230] The solicitor, Mr Henderson, gave evidence. Mr Henderson’s records showed that the apartment had been sold by the developer to some people called Bartel. Any sale by MCK would therefore be as assignee from or nominee of the Bartels. Mr Henderson said he would have expected to be notified if there had been such an assignment. In his capacity as Mr Quirk’s solicitor, he had no knowledge of MCK. The form of agreement made no sense as a nomination or assignment of an existing contract. As we have just seen the formal contract suggested that MCK was developer, which it was not.

Voluntary disclosure

[231] Following his s 19 interview, on 23 September 2010 Mr Leyser submitted a voluntary disclosure about his company’s tax and GST returns. His evidence was that it was sent to him to be signed by TPS, most probably from Mr Skinner. He said that he himself checked the contents were correct.

[232] The disclosure relates to a transaction entered between Leyser Enterprises and MCK. The disclosure reports that the transaction involved the payment of an amount, “with the majority of that amount being returned to the tax payer almost immediately”. It states that the taxpayer believed at the time that the transaction was legal and effective to generate a deduction and to generate input credits for GST. The amount concerned was a payment of $29,870, of which $20,150 was refunded. The disclosure continues that:

The taxpayer now understands the transaction pursuant to which the payments in question were made was said to involve payment of a deposit on real estate purchase with the majority of that deposit being held by the taxpayer pursuant to the terms of the relevant contract.

The taxpayer sought the reversal of deductions and inputs for GST claimed.

Conclusions on counts 39 to 40

[233] I am satisfied beyond a reasonable doubt that counts 39 and 40 have been proved by the Crown. I am satisfied there was no genuine underlying supply for the payment made to TPS on account of MCK in accordance with the 22 March 2007 invoice. I find that the accused knew and intended that the payment would be expensed in Leyser Enterprises’ financial statements (which were prepared under their direction) and that a GST input credit would be claimed. The accused would have been aware that these were claims to which Leyser Enterprises were not entitled.

Sharpay Holdings Limited – tax returns – counts 41 to 42

[234] Count 41 concerns the March 2007 GST return for Sharpay Holdings Limited

(Sharpay Holdings). Count 42 concerns its 2007 income tax return.

Background

[235] Sharpay Holdings develops houses. Its sole director is a Mr Gary Martin. He gave evidence. TPS had done his tax and GST returns, provided general accounting services, and also sourced finance for him when he had a funding shortfall. Both Mr Skinner and Mr Rowley provided these services to him over the years.

[236] Mr Martin’s evidence was that he had had a substantial profit in the 2007 year caused by profitable subdivision developments. In the course of advice to him, Mr Skinner said that there was a way of minimising his tax obligations. Mr Martin said he did not know the details or understand how the payments would work. He was simply told instead of paying tax at the rate of 33c, it could be got down to 22c. He wrote a cheque, and gave it to Mr Skinner. He did not receive any services that he was aware of in exchange for the cheque.

Payment and repayment

[237] Banking records for Sharpay Holdings show that on 7 March 2007 it wrote a cheque in favour of the TPS trust account (Marsden Trust No 2) for $423,225 and the same day received back by direct credit the sum of $376,000. The accounts of Sharpay Holdings for the 2007 year show a substantial increase in subcontractors over the previous year ($888,723 compared to $262,666). It should be noted, though, its sales for the period were also three times that of the previous year. Nonetheless it appears that the $423,225 was expensed in whole or part as a subcontracting expense. In addition a GST input of $47,025 was claimed in March

2007.

[238] That account is not consistent with what Mr Martin said to the Revenue when he was interviewed in December 2009 or in the compulsory s 19 interview that occurred on 8 September 2010. Nor is it consistent with the content of a voluntary disclosure given in October 2010.

Voluntary interview

[239] In the December 2009 voluntary interview Mr Martin was accompanied by Mr Skinner and Mr Rowley. Mr Martin’s evidence was that in preparation for that meeting Mr Skinner had told him that if he could not answer questions he was to look at Mr Skinner, and he would say that Mr Martin could not answer. The meeting ended when a Revenue fraud specialist at the meeting noted the potential for criminal consequences if invoices had been claimed otherwise for a genuine underlying supply.

Section 19 summons, meeting with accused and Revenue interview

[240] After receiving his s 19 summons, Mr Martin contacted the accused. He went to a meeting with both accused at the offices of TPS before the interview on 8

September 2010.

[241] Mr Martin said in evidence that Mr Skinner handed him a letter at the meeting explaining a transactional basis for the payment. The letter explained that he had paid the $423,225 to gain a finance facility from the Marsden No 2 Trust of about $4 million. Mr Martin’s evidence was that he had never entered such an arrangement.

[242] In evidence was an agreement between Marsden Consulting Services and Mr Martin. It purports to have been entered on 1 April 2006 and provides for Marsden to provide “under rights” [sic] for suitable development up to the $4 million. The former financing agreement is peculiar to say the least. But even more peculiar is the fact that essentially identical financing agreements have been entered into by MCK (which ostensibly has nothing to do with Marsden Consulting, save that both are advised by TPS) for other clients AGI Motor Sport Limited and

BRMVR (a company controlled by the accused). I discuss these clients later.46

[243] Mr Martin’s evidence was that he was supplied that agreement by the accused before the s 19 interview with the Revenue. He was shown the agreement at the meeting, and signed it there. He had never received underwrite (however spelt) services, and had not received the $4 million funding.

[244] Mr Martin then went to the s 19 interview. He attempted at the interview to sustain the explanation suggested by the accused. The attempt was not particularly successful. It became apparent at once that the rationale for the transaction was to reduce Sharpay’s effective tax rate. Mr Martin readily admitted that at the interview.

Voluntary disclosure

[245] On 26 October 2010 Mr Martin signed a voluntary disclosure to the Revenue. He said it was prepared by TPS, and that he signed it at a meeting at TPS’s offices. But he could not recall who attended from TPS. The disclosure stated:

Pursuant to the agreement between Marsden No 2 Trust trading as Marsden Consulting Services and Sharpay Holdings Limited dated 1 April 2006 in terms of the termination clause 10.6 it has come to my attention that the payment transactions entered into between “Sharpay Holdings Limited” “the

46 At [350] and [382].

taxpayer” and Marsden No 2 Trust were made to avoid income tax and GST purposes and I as the taxpayer do not wish to dispute whether or not that is the case; rather we wish to proceed on the basis of claiming deductions and inputs was in error.

The disclosure sought reversal of the income tax deduction and GST input credit associated with the 7 March 2007 payment.

[246] I conclude that the accused prepared the disclosure, or that it was prepared under their direction. Given the attention given by the Revenue to Sharpay’s affairs going back to late 2008, it is improbable to say the least that this disclosure would have been released by TPS to Mr Martin without their knowledge and approval.

Recantation

[247] Mr Martin now admits what he told the Revenue at the s 19 meeting was untrue. The explanation prepared for him by Mr Skinner and Mr Rowley at the preliminary meeting was also untrue. The agreement purportedly signed in April

2006 was in fact signed by him in August or September 2010.

[248] Mr Keating cross-examined Mr Martin in some detail. It was put to him that he was in fact seeking funding of this sort of amount, that he was considering investment in a purchase of land in Sutherland Road, Lyall Bay (the estimated value of which was approximately $4 million). Mr Martin accepted that he had looked at the site seriously, but he “did not like the piece of dirt” and did not proceed further. He also said in re-examination that his circumstances were such that he did not need to pay a $400,000 fee to obtain $4 million funding.

[249] Mr Keating put to Mr Martin that he was motivated to change his evidence from the s 19 meeting on the basis that he had in fact received $376,000 from TPS (or the Marsden Trust No 2) and “simply don’t want to pay” it back. Mr Martin rejected that suggestion. I am satisfied that the evidence he gave on this issue was correct.

[250] I accept the evidence given to me by Mr Martin. Were there a genuine underlying financial services transaction of the kind now suggested by the defence, I

have no doubt that Mr Martin would acknowledge that. He had nothing to gain from denying the existence of a genuine transaction, and everything to lose by now admitting that he gave false information under oath in a s 19 interview. What is readily apparent is that, having been caught in a fiction concocted in conjunction with the accused, Mr Martin had the sense to see better of that course of action, and recanted. He would not have done so if there were a genuine underlying transaction.

Conclusions on counts 41 and 42

[251] I am satisfied beyond a reasonable doubt that counts 41 and 42 have been proved by the Crown. I am satisfied that there was no genuine underlying supply for the payment made to TPS on account of Marsden Trust No 2, that the accused knew and intended that the payment would be expensed in Sharpay Holdings’ 2007 accounts (which were prepared under their direction) and would then be used to justify both income tax deductions and a GST input credit claim to which Sharpay Holdings was not entitled.

Nigel Hall Decorators Limited – tax and GST returns – counts 43 to 45

[252] Counts 43 and 45 concern the March and July 2007 GST returns for Nigel Hall Decorators Limited (Nigel Hall Decorators). Count 44 concerns its 2007 income tax return.

Background

[253] Mr Hall is a painting contractor. He has done that job most of his life. For the last ten years he has done so through a company, Nigel Hall Decorators Limited. He has a staff of six. About seven or eight years ago he started using TPS. Mr Skinner was his accountant. He met him about three to four times per annum. Occasionally he would meet Mr Rowley or Ms Chapman. TPS undertook his company’s financial accounts and his income tax returns. Mr Hall did his own GST returns.

Payments and repayments

[254] After the investigation into TPS’s affairs began, Mr Hall attended a s 19 interview on 7 September 2010. And after that interview he prepared, with the assistance of counsel, a voluntary disclosure to the Revenue. The voluntary disclosure was not prepared by either of the accused.

[255] The voluntary disclosure disclosed a payment of $45,000 (GST-inclusive) by Nigel Hall Decorators to Marsden Trust No 2 on 7 March 2007. It states that the GST-exclusive component of that payment was returned very shortly thereafter. Bank records for that transaction were not produced. Nor was there an invoice in evidence.

[256] A second payment of $65,250 was certainly made. But on 6 August 2007, rather than the date in the disclosure: 30 June 2007. A cheque for that amount was written by Mr Hall in favour of TPS Trust, account Marsden Trust No 2. It was deposited by Mr Rowley in the TPS trust account. The same day $58,000 was repaid to Mr Hall’s business.

[257] The $58,000 GST-exclusive component of the second payment was expensed in the accounts for the 2007 tax year. These were prepared by TPS. It is said to be “sub-contract and one off expenses”. I am left unclear as to how any GST input credit claim was made.

Why the payments were made

[258] Mr Hall explained that at a meeting at TPS’s office with Mr Skinner it was explained to him that if he made the $62,500 payment, tax could legitimately be saved. Mr Hall said that Mr Skinner set it out on the whiteboard and, that he did not really take the transaction in. He was simply concerned that it was legitimate. His wife was also present, and occasionally Mr Rowley came into the meeting. Mr Hall’s evidence was that he wrote the cheque out on the day. I found Mr Hall to be a straightforward witness, doing his best to explain the true position to the Court. He

appeared patently honest. He also appeared patently baffled at how exactly the transaction was to work.

Section 19 summons

[259] After Mr Hall received a s 19 interview summons from the Revenue, he made contact with Mr Skinner. Mr Skinner gave an explanation of the transaction that passed well over Mr Hall’s head. Mr Hall recalled that Mr Skinner mentioned in the course of the discussion the purchase of an apartment in Taranaki Street. He cannot now recall the details of that part of the discussion. But Mr Skinner gave him an unsigned agreement dated 5 March 2007 for purchase of a QOTS apartment. The vendor was said to be Marsden No 2 Trust. It provides a purchase price of $305,000 and a deposit of $122,000.

[260] Mr Hall could not remember having seen or discussed such an agreement at the time of the original discussion about the $65,250 payment. But he was clear that he had no wish to invest in such an apartment. Nor indeed did he ever have the funds to do so. He acknowledged, though, that he had had a discussion with Mr Skinner about obtaining the painting contract for a large building. He was not sure which one it was. He accepted, in cross-examination from Mr Lennard for the accused, that it was possible that the whiteboard explanation might have included an option to purchase an apartment, on the basis that at the end of the transaction he would be backed out of it.

[261] The unsigned sale and purchase agreement appears to be in substantially identical terms to that supposedly entered by Leyser Enterprises Limited. This despite the fact that the vendor in the case of Nigel Hall Decorators is Marsden No 2

Trust, and the vendor in the case of Leyser Enterprises was MCK. The Marsden/Nigel Hall Decorators contract therefore suffers from the same difficulties and improbabilities identified in relation to the MCK/Leyser Enterprises

_agreement.47

47 See at [228] above.

[262] I have no reasonable doubt that no such agreement was entered into by Mr Hall, and the document has been produced after the event in an attempt to disguise the true nature of the payments made in March and August 2007.

Counts 44

[263] I am satisfied beyond a reasonable doubt that count 44 has been proved by the Crown. The payment shown to have been made in August 2007 (and in substantial part remitted the same day) was initiated and received by the accused in the course of a common enterprise; there was no genuine underlying supply; and the accused knew and intended that the payment would be expensed in Nigel Hall Decorators’ 2007 financial statements (which were prepared under their direction) and would be used to justify income tax deductions to which that client was not entitled.

Counts 43 and 45

[264] I am not, however, satisfied the Crown has proved beyond a reasonable doubt counts 43 and 45 which concern the two GST returns. In the absence of evidence of payment of the first sum disclosed in the voluntary disclosure and invoices covering either payment, and given that the voluntary disclosure was not prepared under the direction of the accused, I am not satisfied that those two counts have been proved to the requisite standard. I therefore acquit the accused of counts 43 and 45.

Overall Evaluation of period up to June 2007

[265] It is appropriate at this point to step back and look at the evidence regarding the accused’s dealing with their clients up to June 2007 (that being the “early period” chosen in these reasons).

Patterns discernible

[266] It is possible, looking at the evidence for this early period to discern certain patterns.

[267] First, there are the explanations given to clients at the time of entry into the invoice-based transactions. They were described variously as the purchase of “tax losses”, “third party debts” and methods to improve “cash flow”. In other cases they were described more amorphously as a legitimate scheme to reduce the relevant tax rate. Second, the evidence shows that in a large number of cases the invoices had been generated by Mr Rowley. Third, the invoices were not necessarily received at the time of payment. Fourth, the narrative given in the invoice often relates to “consultancy”, “project consultancy” or “subcontractors”. Fifth, I have found as a matter of fact that the Crown has proved that the invoices were generated falsely, without an underlying genuine supply either in the terms described or otherwise. Sixth, the repayments made to clients were sometimes indirect (although not always). Seventh, the repayment proportions to clients were frequently 76 per cent of the GST exclusive component (or 67 per cent of the GST-inclusive face value of the invoice). Eighth, distributions to the accused (where proved) were then frequently in proportions 3:1 in favour of Mr Skinner. Ninth, subsequent justifications offered by the accused for the invoices were in terms either of property acquisitions, or the supply of goods or services. Tenth, these subsequent justifications were in almost all cases hitherto unknown to the clients (and in the single instance of a client suggesting he may have been aware of an underlying supply in those terms, I am not satisfied that his evidence is in fact correct). Eleventh, the subsequent justifications (property acquisition and supply of goods or services) were all unrelated to the face narrative of the invoices. Twelfth, where agreements evidencing those justifications were produced (on the basis they were entered into by clients), none of them were signed by those clients. (The sole exception was Mr Martin, and I have described the circumstances in which he came to sign that agreement.) Thirteenth, the agreements or supporting documents (such as resolutions of trustees) were frequently illogical in substance or in form. I have discussed above the copyright notation in Ms Ertel’s agreement which shows it was created by Mr Rowley well after its apparent date, the perverse execution of Ms Ertel, Mr Wilson and Harding Electrical’s agreements by Mr Newman, the illogical expression of the trustee resolutions in the case of Harding Electrical and the illogicality of the constituent agreements involving the Esk companies, Ms Skiffington, Leyser Holdings, Sharpay Holdings and Nigel Hall Decorators. Fourteenth, the creation times shown in the metadata on the portable hard drive

offered in evidence by the accused to corroborate the genuineness of the Ertel, Wilson, Esk, Skiffington and Leyser acquisition agreements have been altered, evidently by Mr Rowley.

Conclusions – as at June 2007

[268] It is my overwhelming impression, looking at the evidence as at June 2007, that the Crown have established that by then the accused were both engaged in the production of invoices for which there was no genuine underlying supply. The purpose of that exercise was two-fold. First, the creation of expenses which could be claimed by clients as income tax deductions in their business activities, and or as GST input credit claims, to which they were not genuinely entitled. Secondly, as a source of profit to the accused. The evidence of the clients as to what they were told at the time they entered into the transactions stands in sharp contradistinction to the explanations subsequently offered to them and to this Court. The documentary evidence offered to support the latter explanations (not hitherto seen by clients, and not signed by them) does not withstand scrutiny.

D. DISHONEST USE – LATER PERIOD CLIENTS

[269] Against that background, I turn to transactions postdating June 2007.

Topline Tailors Limited – tax and GST returns – counts 49 to 52

Mangiare Foods Limited – tax and GST returns – counts 75 to 77

[270] Counts 49 to 52 involve a company called Topline Tailors Limited (Topline). They concern GST returns in the 2008 year, and income tax returns in the 2008 and

2009 years. The first relevant payment appears to have occurred in September 2007. Counts 75 to 77 relate to an associated company Mangiare Foods Limited, (Mangiare). These counts concern GST and income tax returns in the 2009 year.

Background

[271] A director of both companies, Mr Jason Antonopolous gave evidence. His principal occupation is tailor. He has been a tailor for 30 years. He took over Topline after his father died in 2002. That business continues to trade in Wellington. The other business, Mangiare, ceased trading in about 2002. It seems, however, to have continued to have some financial activity. Its financial accounts for 2009 (prepared by TPS) were in evidence. They showed income from “management fees” of $106,280. However expenses in the form of “subcontractors” were, by coincidence, exactly the same amount. The company would therefore have had no assessable income for that year.

[272] Mr Antonopolous took the accounting work for the two businesses to TPS in about 2006, after a friend joined its the staff. However that friend did not undertake his work. The accounting work for Topline and Mangiare was undertaken by Mr Skinner or a Ms Montgomery, a member of staff. He also had some dealings with Mr Rowley. TPS prepared their financial accounts and prepared their GST and income tax returns. They also undertook the filing of those returns.

[273] Mr Antonopolous’ evidence was that a series of payments were made by the two companies following a discussion with Mr Skinner, as a “way of reducing [my] tax bill”.

Invoices, payments and repayments

[274] Evidence of invoices and payments produced before me were as follows:

(a) 2008: No invoices were in evidence. However there was evidence of payments between Topline and TPS. Two cheques totalling $99,292 were paid on 17 September 2007 to MCK (via the TPS trust account). The cheques were deposited by Mr Rowley. On the same day $67,000 was repaid to Mr Antonopolous’ personal account. Then a further

$273,285 was paid by Topline in three cheques to the TPS trust account

(to be credited to MCK) on 7 November 2007. Again the cheques were deposited by Mr Rowley. Of that amount, three redistributions were made to Mr Antonopolous the same day, totalling $184,619. The amounts paid are consistent with the voluntary disclosure.

(b) 2009: Payment evidence was not before me. I was shown an invoice from Case Marlow to Topline dated 30 November 2008 in the sum of

$48,000 plus GST. Work sheets relating to that invoice in Mr Rowley’s hand indicate that it was paid. Forensic evidence showed the invoice was generated on Mr Rowley’s computer. There is a second invoice in the same period from MCK to Mangiare for $61,280 plus GST. It is not clear to me, however, whether that amount was paid. Neither invoice appears to relate to any of the counts on which the accused are charged.

What were the invoices and payments for?

[275] Topline and Mangiare’s financial statements for 2008 and 2009 were prepared by TPS. TPS also prepared their income tax and GST returns and filed them. Topline’s 2008 financial statement shows a subcontracting cost of $95,111. That for 2009, $62,600. Mangiare’s 2009 accounts only were in evidence. They showed a subcontractors cost of $106,280. It is difficult to relate the scale of the payments, particularly by Topline in the 2008 year, to the deductions claimed that are inherent in the financial statements. However, I am satisfied that some of the payments were reflected in the expense for subcontractors in 2008 and 2009 for Topline. They may also be expenses in other places, for instance under the heading “Management Fees”. However, that was not fully explored in evidence.

[276] As noted earlier, Mr Antonopolous’ evidence was that the payments were made following a discussion with Mr Skinner, as a way of reducing the companies’ tax bills. The payments referred to above related to and followed that discussion. It is plain Mr Antonopolous had no idea how that was to occur. He referred in evidence to there being a “deposit on some accommodation in Nelson”, but he did not know how that was to occur. He thought that the position was that if the project did not proceed, the money would come back to him. However, as we have seen, in

2008 the money was returned to him the day it was paid. Mr Antonopolous could not explain that. He said that he had not seen a sale agreement for the Nelson property. He did not particularly wish to buy an apartment there. I mean no disrespect to Mr Antonopolous if I observe that he was a very unsure and hesitant witness, with poor recall or understanding of commercial matters.

[277] Two unsigned sale agreements were in evidence. One, dated 14 March 2007, was purportedly between MCK and Topline and related to the purchase for $930,000 of some apartments in Nelson. The deposit clause provided for payment of $372,000 plus GST. The second unsigned agreement was for the sale and purchase of an apartment on level 4 of the proposed St George O’Reilly apartment block and was dated 30 May 2008. It involved a deposit of $207,000 on a purchase price of

$828,000. It is in similar form to the “agreements” involving Leyser Enterprises and Nigel Hall Decorators, although for a different development. The same observations made about those “agreements” apply to this one.48

[278] Mr Skinner’s evidence was that the 2008 period payments made by Topline to MCK were indeed payment of the deposit under the former agreement. Likewise, the payments by Mangiare in the 2009 year related to the second contract. Mr Rowley gave similar evidence. The defence case was that the payments were made genuinely and in accordance with contracts they had received from Ms Madondo, and that they are accountable to her for the payments received into the trust account on account of MCK.

[279] As I have made clear, I do not accept the genuineness of the alleged property transactions involving Ms Madondo. Nor do I accept the accused’s evidence that they were accountable to Ms Madondo for the proceeds of those payments. I am left in no reasonable doubt that the underlying contracts were not genuine, and that the payments ultimately made to Ms Madondo were made voluntarily rather than under

_obligations.

48 See at [228] and [261].

Voluntary disclosure

[280] On 21 September 2010, following a s 19 interview, Mr Antonopolous through his counsel Mr James Coleman, submitted a voluntary disclosure to the Revenue. It disclosed the following payments:

(a) 2008: Payment of $372,577 by Topline to MCK (via the TPS trust account) with $251,619 being returned to Topline.

(b) 2009: $54,000 being paid by Topline to MCK (via the TPS trust account) with $38,880 being returned to Topline. Also, $119,565 being paid by Mangiare to MCK (via the trust account) with $57,073 returned to Mangiare.

[281] The voluntary disclosure said that the payments were in error as the transactions may be “void and ineffective for tax purposes despite assurances at the time that everything was legal and effective”. The net result of the disclosure was that the two companies had additional income tax to pay of $155,573 and GST refunds to repay of $60,682, together with whatever penalties and use of money interest might be imposed. This was not, however a voluntary disclosure originating with the accused, unlike those of Harding Electrical or the Esk companies.

Counts 51 and 52

[282] I am satisfied beyond a reasonable doubt that counts 51 and 52 have been proved by the Crown, relating to the income tax returns of Topline for 2008 and

2009. I am satisfied that there was no genuine underlying supply for the payments made by Topline in 2008 and 2009, that the accused knew and intended that those payments be expensed in Topline’s financial statements (prepared under their direction) and would then be used to justify income tax deductions to which Topline was not entitled.

Counts 49, 50 and 75 to 77

[283] I am not satisfied, however, beyond reasonable doubt in relation to the remaining counts in respect of Topline and Mangiare. I am unable satisfactorily to connect the payments shown to have been made to GST input credit claims in the absence of the relevant invoices, a voluntary disclosure document approved by the accused, or more satisfactory evidence from Mr Antonopolous. I therefore acquit the accused of counts 49, 50 and 75 to 77.

AAA Finance Limited – tax returns – counts 53 to 55

Sunshine State Finance Limited – tax returns – counts 63 and 64

[284] Counts 53 to 55 concern a small finance company AAA Finance Limited (AAAF). Counts 63 to 64 a similar enterprise, Sunshine State Finance Limited (SSF). Both are run by a Mr Aashish Patel. They are based in Auckland. The counts concerning AAAF relate to its tax returns for three years, 2007 to 2009. Those concerning SSF relate to its tax returns for the 2008 and 2009. The first relevant transactions within these counts appear to have occurred in November 2007.

Background

[285] Mr Patel gave evidence. He commenced using TPS as his companies’ accountants in about 2002, having been introduced by a family member who also used TPS. He dealt initially with Mr Skinner, and became a friend of his. They met often. He dealt occasionally with Mr Rowley. From time to time Mr Rowley would visit him in Auckland.

Counts 53 to 55, 63 and 64

[286] I can deal with AAAF and SSF relatively briefly. I am satisfied that the

Crown has proved these counts, for the following reasons:

[287] First, voluntary disclosures in standard form, were prepared for the taxpayers by TPS. I am satisfied that the accused were fully cognisant of the preparation of those disclosures. They acknowledged likely invalidity (they say “may be considered void”, but that is a euphemism) of the transactions entered in each year in the counts, resulting in improper total deductions claimed of $463,100 by AAA Finance and $62,040 by SSF.

[288] Second, invoices for “brokerage services”, albeit for a different tax year, were in evidence. The invoices were issued by a company called He & She Limited. As we have seen, that company was until February 2010 in the control of Ms Madondo. The tax invoices have TPS PO Box numbers on them. I consider practical control to have lain in the hands of the accused. Mr Patel confirmed that he received no such “brokerage services”. He said he thought he was buying tax losses “as a way of minimising taxes”, based on a discussion with Mr Skinner in 2006 or

2007. It is apparent from Mr Patel’s evidence that other payments were made

without invoices being rendered.

[289] Third, payments beginning in 2007, relevant to the 2008 and 2009 tax years, were before me. They conform to what may now be said to have been an established pattern:

(a) 2008: Three payments were made to the TPS trust account (account He

& She Limited) by AAAF on 7 November 2007. They total $168,000. Repayments were made the same date in Mr Patel’s personal account totalling $108,400. The cheques were deposited by Mr Rowley. Two additional payments were made by AAAF and SSF to the TPS trust account totalling $76,050 on 6 March 2008. There were no repayments in relation to those in evidence, however.

(b) 2009: Payment was made by AAAF to the TPS trust account of $90,080 on 30 July 2008 (deposited by Mr Rowley) with a repayment to Mr Patel’s personal account of $69,000 the same day. A second payment by AAAF to the TPS trust account of $83,940 was made on 5 November

2008 (deposited by Mr Rowley) with a repayment of $63,790 the same

day. Two further payments of $81,110 by AAAF and $25,220 by SSF were paid to the TPS trust account on 12 February 2009 (again deposited by Mr Rowley) with repayments to Mr Patel’s personal account the same day of $61,640 and $19,167 respectively.

[290] Fourth, before Mr Patel’s s 19 interview on 21 September 2010 Mr Skinner met with him the night before. Mr Skinner gave him some “notes for s 19 meeting” which attribute the transaction to a $4 million loan facility from a second Madondo company, He & She Limited. Mr Patel’s evidence was that there was no substance to that explanation and that it did not occur. Moreover no such funding line was needed by him in any case. Mr Patel repudiated that explanation when he met the Revenue.

[291] I accept the evidence of Mr Patel, who I consider a truthful witness despite the fact that he found himself in the invidious situation of giving evidence against a friend. Correspondingly, I do not accept as truthful the evidence given by both Mr Skinner and Mr Rowley that the payments did indeed form part of a brokerage arrangement between He & She Limited (Ms Madondo) and AAAF.

[292] I am satisfied the Crown has proved counts 53 to 55 and 63 and 64 beyond a reasonable doubt.

SS Transport Limited – tax returns – counts 56 & 57

[293] Counts 56 and 57 concern SS Transport Limited’s 2007 income tax return

and its November 2007 GST return.

Background

[294] The owner of SS Transport is Stefan Sirota. He has been in the cartage business since about 1980. In the mid-2000s he had some tax issues. He saw TPS’s Ghuznee Street offices as he drove off the motorway. He went in to see them. He met with Mr Skinner first, but he has dealt with a number of TPS’s staff. He did his own GST returns. TPS did his annual accounts and tax returns.

[295] In about November 2007 Mr Sirota faced issues with late payment penalties. He went to a meeting at TPS. Mr Skinner was present. There may have been others there from TPS. A method of averting the penalties was suggested to him, which he understood would involve shifting the relevant time period. To effect the scheme he wrote a cheque for $58,972 on 7 November 2007. No invoice for this transaction has been produced. The day after Mr Sirota’s account was credited with $39,840 from the TPS trust account. So the net amount paid was $19,132. In due course the

2007 annual accounts of SS Transport Limited were prepared by TPS. $52,420 appears as a “sub-contractors” expense. That figure is the GST-exclusive amount of a payment of $58,972. In evidence Mr Sirota was clear that he had no such sub- contractor expenses of that amount. While he used sub-contractors for rubbish clearance, the amounts were small. (In the 2006 tax year sub-contractors are just

$5,061).

Section 19 summons

[296] In August 2010 Mr Sirota received a s 19 summons from the Revenue. He called Mr Skinner, who allayed his concerns. Mr Skinner suggested Mr Sirota speak to Mr Lennard. When he saw Mr Lennard, he had some documents with him. One of them suggested that Mr Sirota (or his company) had “possession of an apartment”. This came as news to Mr Sirota. He told Mr Lennard “I don’t know anything about it”. Mr Lennard evidently told him he had better go and discuss it with Mr Skinner. Mr Sirota was uneasy about what was happening. He called his own lawyer, Mr Gerard Dewar of Thomas Dewar Sziranyi Letts in Lower Hutt. He arranged to meet Mr Dewar immediately before his s 19 interview, which was scheduled for

7 September 2010.

[297] On the morning of 7 September, Mr Sirota went to the offices of TPS to pick up some documents. The Revenue’s s 19 notice required him to produce relevant documents, and Mr Skinner had arranged for files to be put together. In the documents he found a lengthy sale and purchase agreement for two apartments in the QOTS development. The vendor was MCK. The agreement was not signed. It was

in similar form to those for Messrs Leyser, Hall and Antonopolous.49 The same curiosities arise as to the form of the agreement, e.g. suggesting that MCK was developer, when it was not.50 It too was a time stamp-altered document on the portable hard drive.

[298] Mr Sirota said he did not know who MCK was. He had never met Ms Madondo. He said he could not recall any discussion about investment in a Taranaki Street apartment when the penalties scheme was explained to him in November 2007. He neither wanted to invest in one, and nor did he have funds for that purpose. However, he accepted in cross-examination that he had put himself in the hands of Mr Skinner and had gone along with his advice. He would not have had a problem with a property transaction if it was legitimate and risk-free. But he simply could not recall being put into a property being part of the plan to alleviate his penalties problems.

Conclusion on counts 56 and 57

[299] I am satisfied beyond a reasonable doubt that counts 56 and 57 have been proved by the Crown. I am satisfied there was no genuine underlying supply for the payment made on 7 September 2007, that the accused knew and intended payment to be expensed in SS Transport’s financial statements (which were prepared under their direction) and would then be used to justify income tax deductions and GST input credit claims to which SS Transport was not entited.

Vicki Breen – tax returns – counts 58 to 61

[300] These four counts concern the tax and GST affairs of Ms Vicki Breen. Counts 58 and 60 concern income tax returns for the 2007 and 2008 years. Counts

59 and 61 relate to GST returns in March 2008 and March 2009. Notwithstanding that a 2007 return is involved, the first relevant payment appears to have occurred in March 2008. The accused are charged jointly with Mr Stevens. It is accepted that

_{they had no direct dealings with Ms Breen.}

49 _{See at [228], [261] and [277].}

50 See at [228].

Background

[301] Ms Breen is a registered clinical psychologist. She was an accounting client of Mr Stevens. Her tax work was done by an employee of Mr Stevens, a Mr Hercus, with whom she now lives.

Counts 58 to 61

[302] I am satisfied the Crown has proved counts 58 and 59 to the requisite standard. These relate to a payment of $41,520 made on 18 March 2008 to the TPS trust account on account of MCK. That cheque was deposited by Mr Rowley. On the same day Ms Breen received back $28,049 from TPS. No invoice was produced. However the banking transaction and Mr Rowley’s deposit slip speak for themselves. I am satisfied that this expense was used, as Ms Breen acknowledges in her voluntary disclosure, to inflate her deductible expenses for the 2007 year (in which she claimed “contractors” expenses of $44,151).

[303] I am also satisfied the Crown has proved count 60 and 61 to the requisite standard. These counts centre on an invoice issued by MCK on 31 March 2008. The evidence before me showed that the document was generated on 4 March 2009 on Mr Rowley’s computer and sent by him by email that same day to Mr Stevens. That invoice was for $19,237 plus GST (totalling $21,641). Ms Breen’s cheque was made out to MCK, and deposited into the TPS trust account by Mr Rowley on

13 March 2009. On the same day Ms Breen received back from the TPS trust account a distribution of $14,620. I am satisfied on the evidence before me that the payment was then used by Mr Stevens (or Mr Hercus) to in part justify a claim for “contractors” expenses in the 2008 tax year which was inflated, with the result that Ms Breen paid substantially less tax than she was otherwise required to do. I am also satisfied that the accused would have known that such an expense would be claimed (and GST input credit claimed) as a result of the invoice being issued.

[304] Ms Breen was not cross-examined on the basis that she had entered into a property transaction with MCK. Mr Hercus, however, gave evidence that Mr Skinner had approached him in 2010 to discuss Ms Breen’s affairs, and showed

him some documents relating to MCK and a property transaction between MCK and Ms Breen. As the person who handled her tax affairs in 2008 (and someone who now lived with Ms Breen) Mr Hercus knew there was no substance to that transaction. He had checked that with Ms Breen who confirmed that fact. As I say, although that evidence is hearsay, the point was not put to Ms Breen when she was giving evidence.

[305] Despite this, when Mr Skinner gave evidence he produced two documents dated 22 February 2008 purporting to be a resolution of the MCK Family Trust appointing Ms Breen a discretionary beneficiary for the purpose of distributing capital to her as a participant in one of four development projects which was not specified in the resolution, viz the Nikau complex in Nelson, QOTS project in Wellington, carparks in the St George complex or development units in the St George O’Reilly project. Mr Skinner said he was “pretty sure” that Ms Breen was involved in the QOTS project. A QOTS agreement was found on the hard drive. It too has had its time stamp altered. I regard that evidence, and the documents produced, as fundamentally unreliable.

[306] I am therefore satisfied the Crown has proved counts 58 to 61 beyond a reasonable doubt.

MQ Property Services Limited – tax return – count 62

[307] There is one count relating to the income tax return for March 2007 of MQ Property Services Limited (MQPSL).

Background

[308] MQPSL is a small property development company. It has completed some apartment developments successfully, but its relevant involvement in this case was in relation to a failed project, the QOTS project on Taranaki Street, Wellington. As has already been noted, its director, Mr Merv Quirk, gave evidence. He was a client of Mr Stevens. Mr Stevens introduced him to the accused Barrie Skinner. At some point in 2007 or thereabouts, TPS took over his accounting work.

[309] The charge here is based on an invoice by “PL Sharp Limited” [sic]51 for

“project consultancy work” to MQPSL dated 31 August 2006 in the sum of

$161,942 plus GST (totalling $182,184).

Count 62

[310] I am satisfied that this count has been proved by the Crown beyond a reasonable doubt.

[311] First, evidence before me showed that that invoice had been generated by Mr Rowley, based on an earlier P&L Sharp/MQPSL invoice template. It is not clear exactly when Mr Rowley did that. Mr Rowley said the invoice was prior to his involvement with MQPSL, but the Crown’s digital forensic evidence refutes that claim.

[312] Second, it is unclear whether the invoice was paid. In any case, this is not a case involving any repayment to the taxpaying client. However, it is clear on the evidence that the invoice was used to deflate MQPSL’s assessable income in its

2007 tax return. The exact same figure ($182,184) appears in MQPSL’s 2007 financial statements (prepared by Mr Stevens’ accounting firm) as “expenses- consultancy”.52 I note also that there is no suggestion that either of the accused were involved in the preparation of MQPSL’s voluntary disclosure which (apart from being in handwriting) is otherwise largely in the standard form adopted by most of the clients in this case.53

[313] Third, Mr Quirk was asked:

Mr La Hood: Did you have any project consultancy work valued at

$161,942 plus GST from a company called PL Sharp Limited?

Mr Quirk: I had quite a bit going on at the time and there was a consultancy going on all over the place but I didn’t think, I didn’t realise there was one there for that size.

51 _{The company name as has been noted before – see at [187] – is P&L Sharp Limited.}

52 _{Although the GST component should have been omitted.}

53 I accept that the wording has its origins in common legal counsel, rather than from the accused.

A few moments later Mr Quirk however acknowledged that the invoice was part of

an exercise recommended by Mr Stevens to “minimise my tax”.

[314] Fourth, in cross-examination it was put to Mr Quirk that Mr Skinner and his company were doing “some serious work” for you on project consultancy, in particular in relation to the QOTS project and were billing Mr Quirk reasonably regularly for the time they were spending on it. In response Mr Quirk accepted that they were doing quite a bit of work for him, but he could not recall what period that work fell into. Mr Quirk was shown TPS’s ledger for entities associated with him which showed billed and unbilled time since May 2007 of $142,000 or thereabouts. The forensic evidence produced by the Crown suggested that MQPSL would have received a number of invoices. This August 2006 invoice for $161,942 pre-dated that period and was for a greater amount than was compiled over the next three years.

[315] Fifth, both Mr Skinner and Mr Rowley gave evidence of some work being done on a consultancy basis for Mr Quirk at that time. The evidence was however fairly desultory in nature and certainly did not displace the overwhelming appearance otherwise given of a deliberate tax evasion transaction to “minimise tax”.

[316] I find count 62 proved beyond a reasonable doubt.

Scotty’s Construction Limited – tax returns – counts 70 to 74

[317] Counts 70 to 74 involve the tax affairs of Scotty’s Construction Limited (Scotty’s). Count 70 and 71 concern Scotty’s income tax returns for 2008 and 2009. Counts 72 to 74 concern its GST returns for July, September and November 2009.

Background

[318] The sole director and shareholder of Scotty’s is Scott Feasey. He has been a builder for some 29 years. He is a relatively recent client of TPS, and Messrs Skinner and Rowley. Until 2009 his accountant was a Mr Chris George. Mr George did Scotty’s accounts and tax returns up to the 2008 tax year. In that year the

accounts he prepared showed tax to pay of $60,561. Scotty’s 2008 tax return was filed in accordance with those accounts. But Mr Feasey was not happy. He did not think he had earned as much money as the accounts showed. At the recommendation of a friend, he contacted Mr Skinner.

[319] Mr Skinner agreed to review his tax position. He was going overseas, and it took him a while to get around to doing it. Mr Feasey went to a meeting at Mr Skinner’s office. Mr Feasey’s evidence, which I accept, is that Mr Skinner said that he had access to tax losses incurred by a different entity – owned by a woman in South Africa who had acquired property now worth considerably less than previously – which could be attributed to Scotty’s. The arrangement was that Mr Feasey would write a cheque, and get a substantial proportion of it back. The difference “was the tax loss”, as he understood it.

Invoices, payments and repayments

[320] On or about 24 July 2009, Scotty’s office manager, Nicky Ford, was called into a meeting at Scotty’s Wellington office. Mr Feasey and Mr Skinner were already there. As a result of that meeting she wrote a cheque to TPS for $153,540. On the same day, Mr Feasey’s personal account received a direct credit from the TPS trust account of $103,750. No invoice existed at that stage.

[321] But Ms Ford insisted that the paper work be done. On 13 October 2009 and again on 15 October 2009 she pressed Mr Rowley for an invoice for the $153,540 payment. On 15 October 2009 Mr Rowley replied:

You will find attached the invoices for $153,540 as requested that were debited to purchases in the 2008 accounts.

Attached were two invoices. The first was from MCK, dated 31 March 2008, for “project consultancy work for the period ended 31 March 2008”. The amount (GST inclusive) was $94,793. The second was from Marsden No 2 Trust, again on 31

March 2008, for “consultancy, marketing and planning services provided for period ended 31 March 2008”. It was for $58,747 (GST inclusive). Together they totalled the $153,540 figure already paid.

[322] Mr Feasey confirmed in evidence that he had never met anyone from

Marsden 2 Trust or from MCK. He had never received services from either of them.

[323] The $150,540 payment had the intended effect, as discussed with Mr Skinner at the outset, of reducing his tax liability for the 2008 year. As Mr Rowley’s email indicated, that amount had been debited to purchases in the 2008 accounts. TPS prepared new March 2008 accounts for Scotty’s. By increasing the sum for purchases, the net effect was the tax to pay for that year was reduced from $60,561 to $15,523. However, Scotty’s had already filed its 2008 tax return. Accordingly, on 11 February 2009 Mr Rowley filed a request for adjustment to Scotty’s 2008 tax return. The request is signed by Mr Rowley and seeks an adjustment of net income by $136,480. The reason given for the adjustment was that “accruals of $136,480 relating to the 2008 tax year were not included”. Further information obtained by the Revenue in response to the request from TPS indicated that purchases of stock had to be increased by that amount. The error was said to have occurred because of the actions of the previous accountant. The Revenue concluded that a clear mistake or genuine error had occurred, and the request for adjustment was actioned.

[324] Mr Feasey’s evidence was that the result of the arrangement effected by the

accused was that he had claimed tax deductions of $136,480 in the 2008 tax year and

$1,257 in the 2009 tax year. Also that he had claimed GST input tax credits for July, September and November 2009 of $17,060, $12,532 and $14,442 respectively.

Section 19 summons

[325] In August 2010 Mr Feasey received a s 19 notice from the Revenue. Mr Feasey asked Mr Skinner what was going on.

[326] There were then two meetings between Mr Feasey and Mr Skinner. Mr Feasey’s evidence is that at the second meeting (which preceded the s 19 interview) Mr Skinner said to him that if they instead entered into a property deal, the South African company “tax loss” deal could be unwound that way. Mr Feasey had at some stage quoted for the construction of a new dwelling for Mr Skinner at a property owned at 259 Queens Drive, Lyall Bay. But Mr Feasey was clear (and I

accept his evidence on this point) that prior to the s 19 meeting occurring there had been no agreement about him entering into a purchase of part of that property, following sub-division.

[327] Mr Feasey repudiated the property-based explanation when he was interviewed by the Revenue on 22 September 2010. He was closely cross-examined by Mr Lennard for the accused on this. I accept his evidence that the suggestion of the purchase of part of 259 Queens Drive arose only after the s 19 notice. Further, that it arose at Mr Skinner’s instigation, as a means of explaining (or “unwinding”) the earlier dealings involving MCK and Marsden No 2 Trust. I found Mr Feasey to be careful and honest witness, conscious of his oath, and possessed of a good recollection of events.

Conclusion on counts 70 to 74

[328] I am satisfied beyond a reasonable doubt that counts 70 to 74 have been proved by the Crown. I am satisfied there was no genuine underlying supply for the payments made to TPS, that the accused knew and intended that those payments would be used to justify income tax deductions and GST input credits to which Scotty’s Construction was not entitled.

Steven Godfrey – tax returns – counts 78 to 80

[329] There are three counts presented in relation to Mr Godfrey’s tax affairs. One concerns his 2009 income tax return. The other two his GST returns in March and November 2009.

Background

[330] Mr Godfrey is a real estate agent in Tauranga. He and his wife operate the Harcourts franchise there. Prior to that the Godfreys ran a “Nutrimetics” franchise. For the 18 years before that he was a police officer. He met Mr Skinner when the latter was advising Nutrimetics franchisees on accounting issues. Mr Skinner

continued to advise him when he became a real estate agent. They met not infrequently when Mr Skinner visited the Bay of Plenty.

[331] Mr Godfrey does not seem to have had any dealings with Mr Rowley. In saying that I note that he was positive to the contrary, and identified Mr Rowley as having visited to his house on one occasion. However Mr Godfrey was giving his evidence by video conference from Tauranga (having recently suffered a serious cycling accident) and I accept the defence evidence that Mr Rowley has not met Mr Godfrey. I note that Mrs Godfrey (who gave evidence in Court in Wellington) could not identify Mr Rowley as the person who visited their house. I find that that person was another TPS employee, Mr Gibson. However Mr Rowley did have email dealings with the Godfreys. He did not in evidence deny participation in the impugned transactions.

Counts 78 to 80

[332] I am satisfied the Crown has proved these counts, to the requisite standard, for the following reasons.

[333] First, a voluntary disclosure document was submitted by Mr Godfrey to the Revenue in October 2010 after a s 19 meeting. Although Mr Godfrey could not recall where that document came from, documentary evidence showed it came from TPS and was prepared under Mr Skinner’s direction. It was sent to the Godfreys

under cover of a letter dated 23 September 2010 from Mr Skinner.54 It is in the

standard form used by other taxpayers (with some minor variations). Notwithstanding the explanation offered in defence, the voluntary disclosure acknowledges the potential invalidity of the deductions claimed. If, as is now being said by the accused, the deductions were legitimately claimed, notwithstanding the narrative on the face of the invoices, there would have been no need for such disclosure to have been made in the terms in which it was made.

[334] Second, the charges (and voluntary disclosure) relate to two invoices. The

_{first is from MCK, is dated 16 March 2009, is for “project consultancy”, and is for}

54 Quoted above at [127].

$32,110 plus GST (totalling $36,123). Count 78 (GST) and 79 (income tax) relate to a filing of returns based on this invoice as a source of deductible tax expense and GST input credit. The second is another MCK invoice, dated 30 October 2009, also for “project consultancy” and for $26,000 plus GST (totalling $29,250). That invoice is the subject of count 80 (GST input credit). The former invoice was paid on 30 March 2009, with Mr Godfrey’s cheque being deposited by Mr Rowley. The same day the Godfreys were credited with repayment from the TPS trust account of

$24,400. The second invoice was paid to the TPS trust account by a Godfrey company, Sinderella Properties Limited on 23 November 2009 by direct credit. On the same day $19,760 was repaid to the Godfreys. This latter payment was also managed by Mr Rowley: there was an email exchange between Mrs Godfrey (who tended to focus on the financial side of the Godfreys’ affairs, to the extent that anyone did) and Mr Rowley regarding delay in accessing the repayments. Mr Rowley explained the process to her as a “trust account distribution”. Mr Rowley gave evidence about the Godfreys and did not disassociate himself from either invoice. Rather, he confirmed that the payments were part of the acquisition of an apartment in the St George O’Reilly complex. I turn now to that proposition.

[335] Third, the accused both gave evidence that there was a genuine basis for the MCK invoices, which was that on 9 March 2009 Mr Godfrey had entered an agreement to purchase an apartment in the St George O’Reilly development, with the invoices then being for deposit instalments payable, part of which was then repayable to the purchaser pending construction. There are a number of problems with that explanation. The first is that the Godfreys, confronted with a challenge to the legitimacy of the deductions just 18 months later in September 2010, could not remember such a purchase contract having been entered. Second, to buttress the allegation the accused suggested that it was part of an arrangement whereby the Godfreys were to have sales rights for the project (with Mr Uren requiring them to acquire an apartment to show faith in the project). The Godfreys had a recollection of some such suggestion being made to them (and it may well be that some plans were sent to them) but I accept their evidence that they – being residential real estate agents based in the Bay of Plenty, over 500 kms north of Wellington – never took the idea seriously and “binned” whatever was sent to them. Third, there is the entire overriding lack of credibility in the Madondo-related apartment transactions,

reinforced by the voluntary disclosure made in this case. Fourth, there is the evidence of Mr Winter demonstrating modification of the time stamp for this agreement (curiously to 4 March 2008) through the use of a time-altered source computer. A fifth further difficulty with the explanation in the case of the Godfreys was the remarkable recording Mr Godfrey made of a conversation he had with Mr Skinner when Mr Skinner came to see them in September 2010. I turn now to that.

[336] Mr Godfrey had been summoned to a s 19 interview with the IRD. After the summons, but before the interview, Mr Skinner went to see him in Tauranga. Unknown to Mr Skinner, however, most of the meeting was recorded by Mr Godfrey using a recording device on his iPhone. The Godfreys, as I have said, had no recollection of having acquired an apartment in Wellington. It was this explanation that was suggested by Mr Skinner in the course of the interview. If such a transaction had indeed been entered, then it would only have been a matter of taking the Godfreys to the relevant documents, and reminding them of a course of events they must have been aware of - because it had occurred just 18 months earlier. But the content of the discussion, recorded on the iPhone, is altogether at odds with the Godfreys having signed up for an apartment 18 months earlier. Instead an explanation is suggested by Mr Skinner “to give some guts” to a purely tax-driven

transaction. Following are some relevant passages from the recording:55

SG: So we were actually on paper we bought an apartment [evidence of surprise in voice].

BS: And effectively on-sold it.

SG: Well who didn’t know, why didn’t you tell us that?

BS: Well at the time it was a subcontracting payment and we needed to boost up what the subcontracting payment was. So we could either claim the subcontracting payment or we could claim secured back against the contract. So if the contract unwinds the contract doesn’t settle ...

BS: What had to do, we had to link the subcontracting to something which was to give it some deductibility in terms of being just a straight subcontractor, so she [Ms Madondo] had a list of contracts and the best way was to link into a contract. ... Which gives us a deduction ... umm the issue is going to be a timing difference. If there’s a timing difference we’ll just

55 “BS” is Mr Skinner, “SG” Mr Godfrey and “RG” Mrs Godfrey.

assign the contract to one of our companies so don’t worry we’ll umm, we’ll

unwind it.

RG: And is that a legal thing?

BS: The documents are legal documents, yes. Umm she had umm an option to acquire certain floors in this block of apartments okay. And what she’s done is she’s -.

RG: This is the South African person?

BS: South African person. Let’s go through the contract. She had an option to acquire certain floors in that area in that apartment block which is being, to be constructed in Wellington. Okay ... now what happened is umm under those options she on-sold individual unit titles ... now under those unit titles she previously issued, and I don’t know why, invoices to us as subcontracting invoices which are the two invoices that she has provided in March 09 and October 09 and said okay, well put out of those invoices there was an amount held by the umm vendor as per the contract and an amount that got refunded to the vendor. So there was an amount that got paid to her and an amount that got paid back. So out of that first invoice for $36,000

$24,400 came back.

And later:

BS: Here is the summary of those two invoices March 09 and October 09. Those are the two amounts that came back and under the contract they said that they were held for the vendor as per the contract which is part of the deposit. There was the deposit that they retained less the GST which was the net cost became $13,950. In the tax returns we essentially claimed a deduction on these two figures here at the rate of 39 cents. That’s what we did. That’s the reason we did it. Didn’t we, remember?

SG: I don’t remember anything.

BS: Okay.

RG: Yeah, yeah, okay.

SG: Well I know I remember, I remember the money part but I don’t remember anything about. I don’t understand how they got to use my name for an apartment because I wouldn’t have done that.

BS: Yeah well what they did was they did a subcontracting invoice and they wanted to attach it to an apartment because if they didn’t attach it to an apartment they were concerned about the deductibility. ... Otherwise what was the subcontracting for? Do you know what I mean?

SG: Well I don’t know.

BS: There was no intention to ever settle the contract, no intention.

RG: At this moment, this is the first thing we know about the apartment.

BS: This is the first thing we found out as well. What might, and what we thought as well we had a look at it, I had a quick look at it once we got your letter [Section 19 interview requirement] and I thought to myself well hold on a minute we needed something that would show why did we enter into the subcontractors.

RG: So in effect if you had not attached it to something it was a fake receipt.

BS: Well we didn’t have a time sheet and a breakdown of how the deduction could come to be. Like in the past you could write a subcontractor invoice from one entity to another, and have no problem at all. So in the past what happens you would pay a fee from one company A to company B. Company B would be owned by a trust and you could distribute out from the trust. IRD have then decided in their wisdom the trust was going to be taxable. So we thought okay, best way around that is she had all these contracts, let’s just attach them to the contracts.

[337] And this:

RG: How come you never told us this?

BS: Because at the time they just supplied us the subcontracting payments. All these other contracts were sitting on disk. Umm and we’ve had trouble getting hold of her. That’s been part of the problem ...

[338] And:

SG: So what it is you are buying tax deductibility?

BS: We were at the time. We were using the tax deductibility but then you must have a reason other than just a tax reason as to why you do the transaction.

SG: Oh okay.

BS: You can’t just do a deal straight for tax.

SG: No.

BS: You’ve got to have commercial reality.

SG: Yes.

BS: So by attaching the subcontracting payments to a contract gave it that commercial reality.

[339] Finally:

BS: ... So from our point of view it was worthwhile in terms of our

deductions our tax deductions. That’s one reason actually that’s the main

reason why we did it to be honest. But we can’t go into the meeting any say

hey we did this solely for tax.

RG: Yeah yeah.

BS: We have got to have a commercial reason. Commercial reason was hey, we are looking at buying this investment we bought with the intention of selling umm the contract provides for a 15 per cent discount on the contract now we have the potential for making over 100 grand on this deal so that’s the commercial reality okay ... so we just had to give it some guts behind it. Unfortunately.

SG: That’s the guts.

BS: That’s the guts. So what we are saying is we are buying and selling.

...

BS: In short all you have got to say is you went into a contract to buy and

sell. That’s all you’ve done when you are looking to try and make money.

[340] I am satisfied beyond a reasonable doubt that counts 78 to 80 have been proved by the Crown. I am satisfied there was no genuine underlying supply for the two invoices in evidence, that there was no genuine contract for the acquisition of an apartment in the St George O’Reilly complex, and that the accused knew and intended that the invoice payments would be used to justify income tax deductions and GST input credits to which Mr Godfrey was not entitled.

Quik’n’Tuff Holdings Limited – GST returns – count 85

[341] The accused face a single count relating to Quik’n’Tuff Holdings Limited

(QNT) September 2009 GST return.

Background

[342] QNT is owned by Mr Wayne Borg. He is a former business associate of Mr Uren. QNT now owns the St George O’Reilly site, having acquired it from KPIL in 2008.56 For reasons not clear by the end of the case, interest on QNT’s $4 million bank borrowing used to purchase the site has been met by Mr Skinner.

_Invoice

56 Settlement occurred only in November 2009.

[343] The charge concerns an MCK invoice for “subcontracting fees” dated

30 September 2009 in the sum of $380,784 plus $47,598 GST (totalling $428,382).

Count 85

[344] I am satisfied that the Crown has proved this count to the requisite standard for the following reasons.

[345] First, this is another instance in which there is a voluntary disclosure, which I am satisfied has been proved to have been prepared by or under the direction of Mr Skinner. It was signed by Mr Borg on Mr Skinner’s advice. As usual, it says that the underlying transaction “may be considered void”. The explanation offered in the disclosure is as follows:

The transaction concerns an invoice dated 30 September 2009. I believe the invoice represents a fee for meeting/achieving a quota of contracts for a development that the taxpayer is undertaking in Boulcott Street, Wellington. This fee is payable under an option agreement which was entered into between the previous owner of the development property, which is part of the terms on which the taxpayer acquired the development property.

The disclosure is signed by Mr Borg. When he gave evidence he was unable to explain the underlying basis of the transaction, and said that he had not drafted the disclosure. His evidence was that that was drafted by Mr Skinner.

[346] Second, Mr Borg’s evidence was also that he was not aware of the invoice at the time and did not receive it. He was not previously aware of MCK. He had not received subcontracting services from it. It was put to Mr Borg in cross-examination that the property was subject to some pre-sold carpark licences, and he thought that might be so. In addition some units might have been sold by Ms Madondo. Mr Borg thought that may have been the case, although not many. He understood the explanation given to him by Mr Skinner in October 2010 as to the finder’s fee, but it does not appear he knew of this in September 2009. I am not aware of any documentary evidence sustaining a contractual obligation to pay such a sum to MCK, either by QNT or by the previous owner of the property.

[347] Third, there is no suggestion that the invoice was ever paid. QNT’s bank account details for May to December 2009 are in evidence, and there was no indication an amount of $428,382 had been paid.

[348] Fourth, the effect of the invoice, in combination with other transactions, was to generate a GST refund of $58,413 which was paid by the IRD to QNT on

27 November 2009. The great majority of that is attributable to the MCK invoice ($47,600). Notably, the same day the refund was received from the Revenue, Mr Skinner (who had authorised signatory status for QNT) drew two cheques on QNT’s bank account. The first was for $18,000 and was payable to “Tax Planning Services”. The second was for $40,220 and was paid to Urban Consultants Limited

– a company owned by Mr Skinner. Mr Borg was at a loss to explain these payments. Indeed he was unaware of the GST refund at all.

[349] Mr Skinner gave evidence that the invoice was a finder’s fee of 3 per cent of the St George O’Reilly sales generated by Ms Madondo. His evidence in relation to that was vague and unsatisfactory, and I have already indicated my disbelief of the role Ms Madondo was said to have played in relation to sales of apartments in each of the St George O’Reilly and QOTS projects. Ms Madondo, it may be noted, had not lived in New Zealand since December 2007 – more than 18 months before the invoice was rendered. Mr Skinner gave evidence that a list of pre-sales generated by Ms Madondo existed. However it was never produced in evidence by any party. Pre-sales listed in an informal April 2011 valuation produced in evidence by Mr Hilton Dougherty, a valuer employed by Harcourts, was based on a list provided by Mr Skinner after charges had been laid. It could not directly be connected to Ms Madondo or MCK. Notably, in this case, the September 2009 invoice for the finder’s fee was not paid by anyone.

BRMVR Holdings Limited – GST returns – counts 86 to 87

[350] The accused face two counts relating to GST returns filed by BRMVR Holdings Limited (BRMVR) in October and November 2009.

Background

[351] BRMVR is directed by the accused. Its shares are held beneficially by the accused in 60/40 proportions (Skinner/Rowley).

[352] There are two invoices before me. The first is from MCK, dated 5 October

2009, and is for “consultancy fees (including assistance with plans, resource consent, obtain legal advice and discussions with clients)” in the sum of $376,500 plus GST of $47,062 (totalling $423,562). In consequence (and as the accused would have known, being directors of BRMVR), a GST return was filed for that month which generated a refund of $43,284 – in large measure due to the MCK invoice. The second invoice is also from MCK, is dated 30 November 2009, and is for “professional fees” in the sum of $106,000 plus GST of $13,250 (totalling

$119,250). As I note subsequently, I heard very little evidence about this invoice. The November 2009 GST return filed by BRMVR generated GST to pay, but the amount was depleted by GST payable on purchases of over $452,000. Neither refund was ultimately paid. The transactions generated an a Revenue investigation and payment was suspended.

[353] Ms Chapman from TPS wrote to the Revenue on 28 January 2010. She gave evidence, but unfortunately was not asked about this subject. She has long accounting experience but is now pensioner. The accused were somewhat slighting in their evidence as to her competence as an accountant. In the circumstances I have no doubt that the letter written by her to the Revenue was produced at their direction. The letter states:

You will find attached a copy of the signed contract between [MCK] and [BRMVR] which details the services to be provided. In accordance with the contract, Momentum was entitled to raise four invoices for the supply, however in the end it raised one as of 5 October 2009 for the full amount of the contract. [MCK] committed on the contract to buy New Zealand property up to the value of four Million [sic] off [BRMVR] during the term of the contract as long as the properties met the criteria [sic]. This enabled a kick start for funding purposes i.e. based on a $10 million development,

4 million would represent 40% of the pre-sales for that development hence going some way towards meeting most of the New Zealand trading banks

strict lending criteria. The cost of the under right [sic] was calculated as

follows:

10% of $4 million which equals $400,000.

Less 5% discount for pre-commitment $20,000.

Less reimbursement of accounting and administration costs calcaluting 17.5% of discount which is equal to $3,500.

This created an all-inclusive fee, agreed up front, with no surprises.

Thus an explanation was offered by that letter for the first invoice for $376,500 plus

GST.

Count 86

[354] I am satisfied the Crown has established count 86 to the requisite standard, for the following reasons.

[355] First, the agreement offered by Ms Chapman in the letter to the Revenue is in the same terms as another MCK agreement for brokerage said to have been entered with AGI Motor Sports Limited.57 As I determine, subsequently, there is every reason to believe that latter agreement was wholly fictitious. Notably, however, the BRMVR contract is in the same terms as a further agreement still, this time between Sharpay Holdings and the Marsden No 2 Trust – a Uren entity which has nothing to

do with MCK and Ms Madondo. I have already found on the evidence that the Sharpay agreement was produced after the event by the accused and is not genuine. Mr Skinner said he did not draft them, but it is very difficult to understand how two distinct entities could have ended up offering finance on substantially identical contracting terms if one or the other of the accused did not draft the agreements. Mr Skinner suggested that they might have been templates supplied by Mr Stevens. But Mr Stevens had nothing to do with the Marsden No 2 Trust. Mr Skinner’s evidence evolved to an acknowledgment that TPS might somehow have adopted Mr Stevens’ templates and provided them to Ms Madondo (for MCK). But that still does not explain how the Marsden No 2 Trust ended up with the same agreement. I do not accept that the BRMVR agreement is any more genuine than the Sharpay agreement.

[356] Secondly, Mr Rowley gave evidence that the facility was entered to fund property developments by BRMVR. One such was 259 Queens Drive, Lyall Bay.

_{That was a property owned by Mr Skinner (who lived there) and which had a large}

57 See [382].

undeveloped land area. What was proposed there was a small three lot in-fill subdivision and building project. Mr Rowley estimated the cost of $1 million would be incurred to construct two new houses, together with professional fees. The invoice on its face is however inconsistent with the transactional explanation. It refers to consultancy fees associated with a development, rather than the provision of a funding line. The invoice appears to have been provided by the accused (through Mr Gibson) in November 2009 following the commencement of the Revenue’s investigation into the BRMVR October 2009 GST return. Following receipt of the invoice, the Revenue (Mr Chaumkell) wrote requiring further evidence of the work completed for BRMVR by MCK. It was as a result of that Ms Chapman (from TPS) wrote the letter quoted earlier.

[357] I am satisfied that the MCK/BRMVR agreement is not genuine. I am satisfied beyond a reasonable doubt there was no genuine underlying supply for the invoice dated 5 October 2009, and that the accused knew and intended the invoice would be used to generate a GST input credit claim for October 2009 to which BRMVR was not entitled.

Count 87

[358] Count 87 (as I have already related) concerns the BRMVR GST return for

30 November 2009. It is possible that this count relates to the 30 November 2009 invoice referred to above. That document appears to have been generated by the TPS receptionist Ms Justine Eyes on 13 January 2010 (by editing a standard template Word document). That is yet another example of an MCK invoice being generated within the premises of TPS, as opposed to being sent to New Zealand on disk as the accused said was the prevalent (if not invariable) practice. However this invoice was the subject of very little examination in evidence. The accused were not cross- examined on it. In the circumstances I am not satisfied that I can form a view beyond reasonable doubt that the invoice was used by BRMVR, or that the accused intended it so to be used, for the BRMVR’s November 2009 GST return. It is likely that that is so, but it has not been shown to be so beyond reasonable doubt.

[359] The accused are acquitted of count 87.

Conaghan Consulting Limited – tax and GST returns – counts 88 to 90

[360] Counts 88 and 90 concern the GST returns of Conaghan Consulting Limited in March 2009 and March 2010. Count 89 concerns Conaghan Consulting’s 2009 income tax return. The accused are charged jointly with Mr Stevens. It is necessary therefore to traverse these counts in rather more detail than those immediately preceding.

Background

[361] Ms Conaghan is a consultant in the health sector. She has previous experience in the IT industry. She provides services through the medium of a small consulting company, Conaghan Consulting Limited. The directors and shareholders are herself and her husband. Ms Conaghan’s husband is not actively involved in the business.

[362] In 2008 Ms Conaghan retained the co-accused, Shaan Stevens and his accounting firm, Guinness Gallagher Accounting Limited, to assist in the preparation of her tax returns. Ms Conaghan appreciated that in the 2009 tax year she would have tax to pay. She had saved about $30,000 to meet that obligation. Mr Stevens looked at her tax affairs and said that he would be able to sort out the difficulties with her tax arrears. She attended a meeting at his home in Kaiwharawhara. Another member of his staff was there. So was Mr Skinner. She had not expected to see him. He was introduced to her by Mr Stevens as a former Revenue inspector who would be able to assist and structure her affairs to reduce tax.

[363] A number of schemes were discussed, principally between Mr Skinner and Mr Stevens. Ms Conaghan said “I just need to know what to pay and when”. Mr Skinner and Mr Stevens talked to her about the acquisition of tax losses from third party companies that were in a development phase. She did not discuss the legality of the situation at that point. Later she obtained an assurance as to its legitimacy from Mr Stevens.

[364] Ms Conaghan’s evidence was that no discussion took place regarding the

purchase of an apartment. She was not interested in that sort of investment.

Invoices, payments and distributions

[365] In due course she received two invoices from Mr Stevens. The first we may put to one side. The second invoice was dated 31 March 2009 and came from MCK. It was for “professional services provided in relation to New Zealand ventures and the viability of proposed business investment”. Forensic evidence from Mr Heard showed this invoice was created by converting a Word document into PDF format on Mr Rowley’s computer. It was for a larger amount than actually paid. The face amount was $61,200, plus GST. It recorded that $46,500 had been “paid”, leaving a balance to pay of $22,350. Ms Conaghan paid that amount into the TPS trust account on 24 November 2009. The next day the trust account was debited $25,000. Of that sum, $15,000 went to Mr Skinner’s personal bank account and $10,000 to Mr Rowley’s.

[366] Ms Conaghan explained that her understanding, from the discussions she had with Mr Skinner and Mr Stevens, was that the invoices were for the purchase of tax losses from other companies. She thought the amount she paid was a cash injection to those companies to assist them with further development.

[367] Ms Conaghan claimed the $61,200 GST-exclusive cost as a business expense in the 2009 income tax return. She split the GST input credit claims between the March 2009 and March 2010 GST returns.

Section 19 summons

[368] In August 2010 Ms Conaghan received a s 19 interview requisition from the

Revenue. She immediately spoke to Mr Stevens.

[369] Ms Conaghan went to a meeting with Mr Stevens and Mr Skinner. She was told that there had been a defalcation by the principal of MCK. Mr Skinner

confirmed that and said that he had gone to South Africa to try and recover some of the money.

[370] A second meeting took place (without Mr Skinner), on 7 September 2010. At that meeting Mr Stevens produced an unsigned sale and purchase agreement for an apartment at the St George Tower, Boulcott Street. The vendor was said to be MCK, the company the subject of the last discussion. Ms Conaghan’s company was shown as purchaser. It was for a purchase price of $843,500, with a deposit of $210,875.

[371] Ms Conaghan said in evidence that she had never seen the document before. She was not aware that she was making any kind of payment in relation to an apartment. She did not want to buy an apartment.

[372] Subsequently, she spoke to a tax barrister, James Coleman. As a result of that discussion she had real concerns about the legitimacy of the transaction. He suggested that she make a voluntary disclosure to the Revenue. Shortly afterwards Mr Stevens contacted her and said she would need to do exactly that. In due course she made a voluntary disclosure reassessing the tax position of her consulting company. It is not one drafted or approved by the accused, so I need not comment further on it.

Conclusion on counts 88 to 90

[373] I am satisfied beyond a reasonable doubt that counts 88 to 90 have been proved by the Crown. I am satisfied there was no genuine underlying supply for the payments made to TPS, that the accused knew and intended that those payments would be used to justify income tax deductions and GST input credits to which Conaghan Consulting was not entitled.

Kilbirnie Plymouth Investments Limited – GST returns – count 91

[374] The accused face one count relating to Kilbirnie Plymouth Investments

Limited (KPIL) September 2009 GST return.

Background

[375] As we have already seen, KPIL is a company held by the accused as trustees. It is said by them to be held for Mr Uren’s ultimate benefit. I have found that explanation untrue and find that the company is held at least substantially for their own benefit (it being unclear what expectation, if any, Mr Uren might have).

[376] This count is a consequence of two invoices by MCK to KPIL for

“subcontracting fees”. The first dated 31 August 2009 is for $149,441 plus $19,930

GST (totalling $179,372). The second is dated 30 September 2009 and is for

$133,777 plus GST of $16,722 (totalling $150,500).

[377] Mr Skinner gave evidence that these invoices were for commissions on pre-

sales of units in the St George O’Reilly development, and were later reversed.

Count 91

[378] I am satisfied that the Crown has proven this count beyond a reasonable doubt, for the following reasons.

[379] First, I am satisfied there was no legitimate underlying supply for the two MCK invoices. These invoices were said by Mr Skinner (and by Mr Rowley) to be payable to MCK for pre-sales commissions generated by MCK. There is however no evidence which would cause me to believe that Ms Madondo had sold so much as one unit in one development, let alone the level of sales as here suggested. Had that been the case, I am confident that there would have been available evidence of her activity. There is none of that before me. It is improbable beyond reasonable doubt that Ms Madondo had the skills and contacts to generate such sales, particularly when she appears to have done so virtually without trace. I conclude, rather, that the invoices were generated by the accused to further their established sequence of frauds.

[380] Second, that conclusion is enhanced rather than diminished by the evidence given by the accused themselves. Mr Skinner gave evidence (as I have said) that the

invoices were generated by MCK, and then reversed. That was because it was later disputed that there was any obligation to pay MCK or Ms Madondo commission. Mr Skinner’s evidence is instructive:

Mr Lennard: And why was the transaction reversed?

Mr Skinner: Because it was disputed as to whether there was an obligation and liability to pay any commission at all.

Mr Lennard: And why was that disputed?

Mr Skinner: Umm, partly because at that stage there was other certain obligations that Ms Madondo had agreed to complete and started to show signs that they were unlikely to complete and on that basis it wasn’t agreed that any payment would be made.

That explanation defies credibility. If Ms Madondo had indeed generated pre-sales, a commission would be payable and an invoice could be raised by her. As I have said, however, the overwhelming evidence is that she had not done so.

[381] Third, Mr Rowley gave evidence. He said that the invoice was reversed because the purchaser of the St George O’Reilly site, QNT (which had agreed to purchase the property in October 2008 and which finally acquired it in November

2009) should bear the costs of pre-sales as purchaser of the site. Mr Rowley gave evidence that the invoices for QNT and KPIL arrived “pretty much at the same time” on disks from Zimbabwe where Ms Madondo now resided. He accepted that the August 2009 KPIL invoice would have come earlier. But that leaves us with the two commission invoices both dated 30 September 2009, both for pre-sales commission on the same project, both presented for GST input credit purposes by their recipients

– which were two different entities entirely. That makes no sense at all if one or the other only was liable and QNT was to replace KPIL as the liable party.

AGI Motor Sport Limited – tax and GST returns – counts 92 to 93

[382] The accused face two charges (jointly with Mr Stevens) in relation to AGI Motor Sport Limited (AGI) 2009 tax return and March 2010 GST return.

Background

[383] AGI is owned by Aaron Gotlieb. He is a youthful entrepreneur who, at age

33, now has traded profitably in clothing, mobile phone technology and (via AGI) motor parts over the course of the last decade. During this time his accountant was Mr Stevens. He handled all AGI’s tax and GST returns.

[384] In about February 2010 Mr Stevens contacted Mr Gotlieb and told him that he was in a “very bad tax position”. That appears to have meant that AGI had traded profitably but without retaining sufficient money to pay taxes. Mr Gotlieb’s evidence was that Mr Stevens said that he “had a scheme” to sort out the problem, which would involve invoices being sent to AGI, payment being made and money then being returned which “would sort of cancel out my other tax”. Mr Gotlieb said he did not understand how the scheme worked, and relied on Mr Stevens.

[385] In due course AGI received invoices from MCK. The first is dated 31 March

2009 and is for “professional services provided in relation to New Zealand ventures

and the viability of proposed business investment for the period ended 31 March

2009 ...”. It is for $99,947 plus GST of $12,493 (totalling $112,440). The second

MCK invoice is dated 30 November 2009. It has a similar narration and is for

$119,721 plus GST of $14,965 totalling $134,686. The third invoice is dated

31 March 2010. It is for the same amount as the 31 March 2009 invoice. The second part of the narrative is the same as the March 2009 invoice, but the opening paragraph instead reads “commissions as per contract commenced on 1 April 2008”.

Counts 92-93

[386] I am satisfied that these counts have been proved by the Crown beyond a reasonable doubt. My reasons are as follows.

[387] First, it is clear that Mr Rowley sent the invoices to Mr Stevens. First, there is an email dated 11 February 2010 attaching the first two invoices. A second invoice, dated 12 April 2010 from Mr Rowley sends the third invoice.

[388] Second, there is evidence before me that suggests that Mr Rowley created the

PDF versions of the March 2009 and 2010 invoices from Word documents.

[389] Third, the face amount of the third invoice (dated 31 March 2010) was paid by AGI to the TPS trust account in three instalments on 12 and 13 April 2010. Two repayments were then immediately made from the TSP trust account to Mr Gotlieb’s personal account. They total $75,960, which again is 76 per cent of the GST- exclusive component of the invoice.

[390] Fourth, there is a chain of correspondence surrounding these invoices between Mr Stevens’ accounting firm Guinness Gallagher Associates and MCK or TPS (on MCK’s behalf). It relates to alleged dissatisfaction by Guinness Gallagher’s client AGI with MCK’s performance of an agreement apparently entered between the two parties in 2008. The correspondence culminates in AGI cancelling the agreement and agreeing to pay $112,440 in accordance with the invoice dated 31

March 2009. It states that notwithstanding payment, the “issue is still in dispute” and that a legal remedy will be sought. A week later there is a letter from TPS (signed by Mr Rowley) on behalf of MCK offering a refund of $76,000 in full and final settlement.

[391] That correspondence might therefore be seen to explain the payments referred to in the previous paragraph. There are, however, a number of difficulties with that proposition. The first is that the transaction fits the ordinary modus operandi established already: false invoicing, payment (with a GST and income tax claim made) and a 76 per cent (GST-exclusive) repayment. Second, the supposed

2008 agreement is another standard form agreement like that supposedly entered between MCK and BRMVR, and Marsden No 2 Trust and Sharpay Holdings. It appears on its face to relate to funding or investment. Schedule A, for instance, is headed “Purpose of Investment”. But the “outputs” in Schedule A, for which payment is to be made to MCK, are all for services: the renegotiation of an agreement between AGI and one of its suppliers. To say the least the customisation of the standard template in this instance is a work of bizarre and erratic draftsmanship. The agreement produced again is not signed. Third, Mr Gotlieb’s evidence was perfectly clear: no such agreement had in fact been entered by him:

Mr La Hood: You will see that he refers to [a] contract between AGI ...

Mr Gotlieb: That’s correct.

Mr La Hood: And Money Club International? Mr Gotlieb: Yeah, AGI Motor Sports, yeah.

Mr La Hood: Were you ever aware of any sort of negotiation like this or [a] letter being sent to Momentum Consulting Kinetics Limited by Mr Stevens on behalf of your company?

Mr Gotlieb? No.

...

Mr La Hood: We have heard purportedly [of] an agreement between [MCK] and AGI dated 30 June 2008. Was AGI ever involved in an agreement like this?

Mr Gotlieb: No it wasn’t.

Mr La Hood: Did you ever meet or speak to a Miide Madondo as set out on page 361?

Mr Gotlieb? No, never.

I accept the veracity of Mr Gotlieb’s evidence. Where conflicting with that of the accused, I prefer that of Mr Gotlieb.

[392] Fifth, Mr Stevens’ evidence was that the chain of correspondence supposedly written in early 2010 settling the “dispute” was completely fictitious. He said that after the Revenue raid at TPS Mr Skinner visited him at home. He told him they needed to “create paper work” to justify the invoicing scheme. He did not think property-based transactions would work for AGI. Mr Stevens said that he gave Mr Skinner access to Guinness Gallagher’s printed letterhead and his electronic signature (the three Guinness Gallagher letters are signed exactly identically). Mr Skinner (or more likely Mr Rowley – whose signature is on one of them) then produced the letters supposedly sent by Mr Stevens. Mr Stevens was cross- examined by Mr Keating in relation to the conversation he had with Mr Skinner (although not specifically in relation to AGI). He maintained his position as to the content of that meeting. I accept the Crown’s submission that I am able to rely on Mr Stevens’ evidence. He had already pleaded guilty to charges materially identical to the accused on this matter, based on these invoices being fictitious. If the defence

case is correct, Mr Stevens would not have been guilty at all. I accept the Crown submission that it is implausible that Mr Stevens would lie and say it was all a fraud when the truth would have been wholly exculpatory.

[393] Finally, although Mr Gotlieb’s only contact with the accused was a brief meeting with Mr Skinner (at Mr Stevens’ request, on the morning of Mr Gotlieb’s s 19 meeting on 9 September 2010) I am satisfied that both accused were together associated in generating the invoices on which the 2009 tax return and the March

2010 GST return by AGI were in part based. Likewise the correspondence concerning the contractual “dispute” between AGI and MCK. I find that the purpose of Mr Skinner in attending that brief meeting was to bolster the false documentary trail already supplied to Mr Gotlieb by Mr Stevens (but which the accused had been party to) ahead of his s 19 interview. Mr Gotlieb then attempted to do that at the interview. His attempts to explain the “dispute” were less than successful. Less than two weeks later, through counsel, he filed a voluntary disclosure acknowledging the potential invalidity of the tax deduction and GST input credit claimed.

E. PERVERSION OF COURSE OF JUSTICE

[394] The accused face seven charges of attempting to pervert the course of justice. These charges relate to communications between the accused and certain clients prior to the clients’ s 19 interviews with the Revenue.

Legal elements

[395] The accused are charged under ss 117(e) and 66 of the Crimes Act 1961. The former provides:

117 Corrupting juries and witnesses

Every one is liable to imprisonment for a term not exceeding 7 years who—

...

(e) wilfully attempts in any other way to obstruct, prevent, pervert, or defeat the course of justice in New Zealand or the course of justice in an overseas jurisdiction.

[396] The object of the offence is to protect the processes and procedures of the Courts.58 It is not necessary for Court proceedings to have been instituted at the time the offence is committed. “It suffices that there is an act which has a tendency to prevent or obstruct a prosecution which an accused contemplated might follow, with an intention on the part of the accused to pervert the course of justice”.59 And:

[An] act which has a tendency to deflect [the Crown] from prosecuting a criminal offence or adducing evidence of the true facts is an act which tends to pervert the course of justice if undertaken with this purpose in mind.60

[397] The Crown accept that these seven charges are parasitic to the prior counts under s 228(b).

[398] The Crown must show:

(a) the accused appreciated that a Revenue investigation was on foot which might result in criminal charges being brought (against either them or their clients);

(b) the accused knowingly supplied false information (to their clients);

(c) they did so with the intention that that information be used in the course of the Revenue investigation; and

(d) their purpose in doing so was to deflect the Revenue from prosecuting a criminal offence or adducing evidence of the true facts (and to thereby avoid criminal prosecution).

[399] In the present case elements (a), (b) and (d) are all in issue. The defence accepted at the outset that if (a) and (b) were established, then (c) was a “reasonable inference”.

[400] The accused’s position is that their clients were summoned by the Revenue to

_{attend compulsory s 19 interviews and to produce all relevant documents; the clients}

58 _{McMahon v R [2009] NZCA 472 at [87].}

59 _Ibid.

60 Ibid.

asked the accused for those documents; they supplied the clients with the documents “and with an explanation as to how the transaction in question worked so as to enable the clients to comply with their obligation under s 19”; they believed the information they supplied the clients was correct; and that they had no apprehension at the relevant time that criminal charges were a possibility.

[401] As the Crown submitted in closing, there does not appear to be any dispute that the accused met with the clients named in the relevant charges prior to their s 19 interviews. Nor that during those meetings the clients were provided with explanations and (in some cases) supporting documentation. And, finally, nor that it was intended that the clients would provide those explanations to the Revenue during their s 19 interviews.

Overarching considerations

[402] There are three relevant overarching considerations that need to be noted at the outset.

Element (a): Awareness of potential prosecution – timing

[403] The first relates to element (a) – i.e. whether the accused appreciated that the Revenue investigation might result in criminal charges being brought against them (or their clients) – and if so when. I am satisfied that no later than 14 April 2010 the accused must have been aware that a Revenue investigation was on foot which might result in criminal charges being brought against either them or their clients. My reasons for reaching that conclusion are three-fold.

[404] First, I have found as a matter of fact in my analysis of the primary charges that the accused had committed frauds on the Revenue in a substantial and sustained manner since 2005, and with a wide variety of client entities. It follows, therefore, that as the Revenue started to investigate some of those entities, and then the activities of the accused themselves, they would have been aware of the potential implications of the Revenue’s course of action. It is not a situation where (as the accused sought to characterise it) the Revenue’s actions came out of the blue against

a background of wholly innocent activity. The accused would have been vividly aware of where things might head for them.

[405] Second, by August 2008 the accused were aware that the Revenue had concerns about subcontracting expenses claimed by Sharpay Holdings. In June 2008 the Revenue had written to TPS requesting information in relation to expenses claimed by Sharpay. In August 2008 TPS responded providing invoices and supporting material (including subcontracting invoices from the Marsden No 2

Trust) to sustain the deduction claimed. Further information requests were made by the Revenue in June 2009, and Mr Rowley responded to those in July 2009. Then, on 16 December 2009 a voluntary interview was held with Mr Martin (the director of Sharpay) and Mr Skinner. As noted earlier, the meeting ended when a Revenue fraud specialist at the meeting noted the potential for criminal consequences if invoices had been claimed upon in the absence of a genuine underlying supply. She suggested to Mr Martin that he seek independent legal advice because the content of

the interview (not being a s 19 one) could be used in evidence against him.61

[406] Third, on 14 April 2010 a search warrant was executed at the accused’s business premises, without prior warning. Twelve Revenue officers attended, and a thorough room-by-room search of the office was conducted over a 12 hour period. Material was seized. Computers were forensically imaged. Such a course of conduct, against a registered tax agency, is exceptional in New Zealand. The accused knew that. They were on holiday together in Australia, and had to return home at short notice. Mr Skinner had been intending to travel on from Australia to South Africa to meet Ms Madondo. He had to cancel that leg of the trip.

[407] I therefore regard 14 April 2010 as defining the point at which the accused – particularly given my findings as to fraudulent conduct already committed by them – must have been in no doubt that the Revenue investigation might result in criminal

_{charges against them or their clients.}

61 The contents of s 19 interviews cannot be used against interviewees.

[408] I note also, by way of needless longstop, that on 20 August 2010 Mr Rowley received Notices of Response from the Revenue in relation to proposed adjustments for TPS, TPS Asset Partnership and Urban Consultants Limited. Each states:

The Commissioner has serious concerns regarding the tax compliance of the taxpayer as well as entities associated with the taxpayer and clients of the taxpayer. Based on the documentation currently held the Commissioner has concerns regarding potentially fraudulent activity that may have an impact on the proposed adjustments sought by the taxpayer.

The accused attempted in cross-examination to play down the significance of those communications from the Revenue. I simply do not accept those attempts. Mr Rowley admitted that he probably did speak to Mr Raggett about the accusation of fraud in the letter. And that he told him he was shocked by it. I do not accept the accused’s explanation that they treated that accusation as a routine inquiry confined to the affairs of TPS, and that they did not appreciate its wider implications. Given the context I have already described and found, that explanation is just not credible.

Element (b): Counselling not required

[409] The second overarching consideration relates to element (b) identified in

[400] above. It is not necessary for the purposes of committing an offence under s

117(e) for an accused to have counselled a person being interviewed by the Revenue under s 19 to lie. It is enough for the Crown’s purposes to establish that the accused knowingly supplied false information to clients, and did so with the intent and purpose in elements (c) and (d): that that false information then be conveyed to the Revenue by those clients, to deflect the prospect of prosecution.

[410] As we have seen from the evidence, the clients in fact reacted in a variety of ways. Some (such as Mr Gotlieb, Mr Martin and Mr Leyser) attempted to convey the false information. Others (such as Ms Skiffington) repudiated it at the s 19 interview.

Position of Mr Rowley

[411] The third overarching consideration concerns the position of Mr Rowley. Most (but not all) of the client meetings the Crown say constitute offences involved

only Mr Skinner. That with Ms Skiffington did involve Mr Rowley. But Mr Rowley did not seek in evidence to differentiate himself at all from Mr Skinner in relation to the client meetings. His evidence on this was as follows:

Mr La Hood: ... Touching on what you’ve just said, in terms of the charges of [perverting] before the Court, you were aware that Barrie was speaking to certain clients but your position is that he was simply telling them the truth about their transactions to make sure they had the best information to tell IRD. Is that a fair way of putting it?

Mr Rowley: No, ah, what he was giving to clients was basically what was on file and, um, basically re, um, telling them basically what the, their situation was with the transaction.

Mr La Hood: You were happy with him doing that though, weren’t you?

Mr Rowley: The, um –

Mr La Hood: Just answer the question yes or no and you can explain. You were happy for him to do that?

Mr Rowley: We had an obligation to do it. Mr La Hood: Yep, and you knew about it.

Mr Rowley: We had – we were required to do that under the section 19 information they required they needed that information.

Mr La Hood: And –

Mr Rowley: We had no choice, Mr La Hood.

[412] Although no charge was presented in relation to it I note that Mr Rowley was also present at a pre-s 19 interview meeting with Mr Martin (along with Mr Skinner) at which an attempt was made to persuade Mr Martin to give evidence that I have found to be false.62 Mr Rowley knew what was going on. The forensic evidence demonstrates that he was the person producing the documentary material given to interviewees. Their production was beyond Mr Skinner’s rudimentary IT skills.

Aaron Gotlieb - count 94

[413] Count 94 reads:

THE CROWN SOLICITOR AT WELLINGTON CHARGES that BARRIE JAMES SKINNER and DAVID INGRAM ROWLEY (together with Shaan

62 See at [240]-[243].

Winiata Stevens) between 1 June 2010 and 1 October 2010, at Wellington, did wilfully attempt to pervert the course of justice, namely did attempt to persuade Aaron Gotlieb to provide the Commissioner of Inland Revenue, during the course of a compulsory interview process under section 19 of the Tax Administration Act 1994, with evidence that Barrie James Skinner and David Ingram Rowley knew to be false, in an attempt to avoid criminal liability.

[414] I have set out my relevant findings of fact in relation to Mr Gotlieb and his dealings with the accused starting at [390].

[415] I find count 94 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information via Mr Stevens, and also via the accused Mr Skinner, to Mr Gotlieb, knowing he was about to be the subject of a compulsory s 19 interview by the Revenue, regarding invoices generated by the accused in 2009 and 2010.

(c) The accused did so with the intent that Mr Gotlieb use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Mr Gotlieb was to deflect the Revenue from adducing evidence of the true facts regarding AGI’s tax affairs and thereby avoid criminal prosecution.

Lorraine Skiffington - count 95

[416] Count 95 charges the accused with wilfully attempting to pervert the course of justice between 12 August and 21 September 2010 by attempting to persuade Ms Skiffington to provide evidence at her s 19 interview which they knew to be false.

[417] I have set out my relevant findings of fact in relation to Ms Skiffington and her dealings with the accused starting at [196] above.

[418] I find count 95 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information at the meeting on

17 August 2010 with Ms Skiffington and Mr Green, knowing the former was about to be the subject of a compulsory s 19 interview by the Revenue, regarding payments made by her to TPS between March 2007 and October 2008.

(c) The accused did so with the intent that Ms Skiffington and Mr Green use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Ms Skiffington and Mr Green was to deflect the Revenue from adducing evidence of the true facts regarding Ms Skiffington’s tax affairs and thereby avoid criminal prosecution.

Stefan Sirota - count 96

[419] Count 96 charges the accused with wilfully attempting to pervert the course of justice between 24 August and 8 September 2010 by attempting to persuade Mr Sirota to provide evidence at his s 19 interview with evidence the accused knew to be false.

[420] I have set out my relevant findings of fact in relation to Mr Sirota and his dealings with the accused starting at [296] above.

[421] I find count 96 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information to Mr Sirota, knowing he was about to be the subject of a compulsory s 19 interview by the Revenue, regarding the payment made by him to TPS in November 2007.

(c) The accused did so with the intent that Mr Sirota use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Mr Sirota was to deflect the Revenue from adducing evidence of the true facts regarding SS Transport’s tax affairs and thereby avoid criminal prosecution.

Steven Godfrey - count 97

[422] Count 97 charges the accused with wilfully attempting to pervert the course of justice between 16 August and 11 September 2010 by attempting to persuade Mr Godfrey to provide evidence at his s 19 interview with evidence the accused knew to be false.

[423] I have set out my relevant findings of fact in relation to Mr Godfrey and his dealings with the accused starting at [336] above.

[424] I find count 97 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information to Mr Godfrey, knowing he was about to be the subject of a compulsory s 19 interview by the Revenue, regarding the MCK invoices paid by him to TPS in March and November 2009.

(c) The accused did so with the intent that Mr Godfrey use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Mr Godfrey was to deflect the Revenue from adducing evidence of the true facts regarding Mr Godfrey’s tax affairs and thereby avoid criminal prosecution.

Douglas Leyser - count 98

[425] Count 98 charges the accused with wilfully attempting to pervert the course of justice between 25 August and 18 September 2010 by attempting to persuade Mr Leyser to provide evidence at his s 19 interview with evidence the accused knew to be false.

[426] I have set out my relevant findings of fact in relation to Mr Leyser and his dealings with the accused starting at [227] above.

[427] I find count 98 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information to Mr Leyser, knowing he was about to be the subject of a compulsory s 19 interview by the Revenue, regarding the payment by him to TPS in July 2007.

(c) The accused did so with the intent that Mr Leyser use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Mr Leyser was to deflect the Revenue from adducing evidence of the true facts regarding Leyser Enterprise’s tax affairs and thereby avoid criminal prosecution.

Scott Feasey - count 99

[428] Count 99 charges the accused with wilfully attempting to pervert the course of justice between 16 August and 23 September 2010 by attempting to persuade Mr Feasey to provide evidence at his s 19 interview with evidence the accused knew to be false.

[429] I have set out my relevant findings of fact in relation to Mr Feasey and his dealings with the accused starting at [326].

[430] I find count 99 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information to Mr Feasey, knowing he was about to be the subject of a compulsory s 19 interview by the Revenue, regarding the payment made by him to TPS in July 2009.

(c) The accused did so with the intent that Mr Feasey use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Mr Feasey was to deflect the Revenue from adducing evidence of the true facts regarding Scotty’s tax affairs and thereby avoid criminal prosecution.

Aashish Patel - count 100

[431] Count 100 charges the accused with wilfully attempting to pervert the course of justice between 10 September and 23 September 2010 by attempting to persuade Mr Patel to provide evidence at his s 19 interview with evidence the accused knew to be false.

[432] I have set out my relevant findings of fact in relation to Mr Patel and his dealings with the accused starting at [290] above.

[433] I find count 100 proved by the Crown beyond a reasonable doubt. In short I

have no reasonable doubt on the evidence that:

(a) By 14 April 2010 the accused were aware that the Revenue investigation into the affairs of their clients and their own entities might result in criminal charges being brought.

(b) The accused knowingly supplied false information to Mr Patel, knowing he was about to be the subject of a compulsory s 19 interview by the Revenue, regarding payments made by him to TPS between November

2007 and February 2009.

(c) The accused did so with the intent that Mr Patel use that information in the s 19 interview.

(d) The accused’s purpose in supplying that false information to Mr Patel was to deflect the Revenue from adducing evidence of the true facts

regarding AAAF and Sunshine State’s tax affairs and thereby avoid

criminal prosecution.

F. KNOWING PROVISION OF FALSE INFORMATION

[434] Counts 101 to 110 charge the accused individually with knowingly providing false income tax returns for the years 2006 to 2010, with intent to evade the assessment or payment of income tax. It will suffice for present purposes to quote just one of the counts, count 101, which is against Mr Skinner:

THE CROWN SOLICITOR AT WELLINGTON CHARGES that BARRIE JAMES SKINNER on or about 29 March 2007, at Wellington, did knowingly provide a false income tax return for the year ended 31 March

2006 to the Commissioner of Inland Revenue with respect to income obtained from entering clients into certain transactions, intending to evade

the assessment or payment of income tax.

The remaining counts are in similar form.

Section 347 application

[435] In a judgment dated 30 May 2012 I dealt with a s 347 discharge application by the accused. It was based on a short point of law. A return is an “assessment”. It is therefore a “disputable decision” for the purposes of the TAA. Section 109 of that Act provides that no “disputable decision” may be disputed in a Court except objection proceedings under Part 8 or a challenge under Part 8A. The accused therefore submitted that if the Crown wished to bring evasion charges based on false returns, it needed to dispute the assessment first by going through the Part 4A process (issuing a notice of proposed adjustment), or else going through one of the other statutory exceptions enabling it to raise an amended assessment.

[436] I dismissed that application. I held that to advance a false information charge under s 143B(1)(c) of the Act, the Crown did not need to first issue a notice of proposed adjustment. The difficulty arises because s 109 is a legacy provision from legislation pre-dating the 2001 introduction of taxpayer self-assessment. Hitherto only the Commissioner made assessments. I held that the fundamental question was

not whether s 109 was inapplicable in criminal cases to preclude collateral attack on an assessment, but instead whether the assessment has conclusive evidential effect as to any element of the charges brought under s 143B(1)(c). I then held:

[23] It is common ground that to succeed the Crown must prove five elements: (1) the accused provided information to the Revenue; (2) the information was false; (3) the accused knew the information was false; (4) the information was in respect of a tax law or matter or thing related to tax law; and (5) the accused intended to evade the assessment or payment of tax by himself under a tax law.

[24] The focus for present purposes is on element (2). It would be somewhat surprising that a provision focused on evasion could be answered by the accused saying that the assessment that he issued (and which is said by the Crown to be based upon false information deliberately supplied) is conclusive as a matter of evidence as to the truth of the information he supplied to the Revenue. Or that it is essential that the Revenue first issued a notice of proposed adjustment (or engaged s 89C(eb)) before the Crown may charge under s 143B(1).

[25] In this respect it is significant that the normal time limits for reassessment do not apply where the Revenue considers a return fraudulently or wilfully misleading. I do not consider it was Parliament’s intent that s

109 offer sanctuary to a taxpayer charged under s 143B(1)(c) in the absence of a prior challenge to the resultant assessment. Given the absence of time

limit for reassessment in the case of fraudulent returns, it is entirely logical

and efficient that the Revenue be able to await the outcome of a prosecution before reassessing tax.

[26] In my view, s 109 applies in criminal cases (if at all) only where a party is directly attacking the prior assessment. The assessment is conclusive (at least provisionally, until reassessment) as to liability to pay a certain tax amount. But it is not conclusive as to the correctness of the information supplied to the Revenue. That information is neither the assessment, and nor is it a “particular” of it for the purposes of s 109. The Crown remains at liberty to allege in criminal proceedings that the return is the product of false information for the purposes of s 143B(1)(c), without the Revenue first disputing the assessment under the statutory procedures for doing so. As in Smith, a charge under s 143B(1)(c) does not require proof that the tax payable is a different sum from that specified in the assessment. It simply requires proof that information supplied to the Revenue was false. As to that, the assessment, whether by the Revenue or by taxpayer, is not conclusive evidence one way or the other.

Legal elements

[437] The legal elements required to be proved by the Crown are set out in [23] of my earlier judgment, quoted in the immediately preceding paragraph. There was no issue in this case regarding elements (1) or (4). The accused lodged the tax returns.

These provided information to the Commissioner. The accused plainly appreciated that the returns related to compliance with tax law.

Crown case

[438] The Crown alleges that the accused filed personal income tax returns which were false in as much as they understated income, with the intent to evade assessment and payment of tax. The Crown submits that all that is needed to establish element (2) – falsity of information – is that the returns were inaccurate or incorrect (i.e. different to what they should have been).63

[439] The Crown submits that element (2) depends on whether the accused attained a personal benefit from the transactions giving rise to their substantive frauds in counts 1 to 93. The Crown submits that the unremitted portions of the payments received from clients producing taxable income fall within s CB32 of the Income Tax Act 2007 – i.e. it is “property [obtained] without claim of right”. It therefore forms part of the accused’s gross income.

[440] The Crown evidence shows that in the income tax years 2006 to 2010 the accused declared assessable income as follows:

Accused Rowley 2006 2007 2008 2009 2010

Taxable income $22,326 $37,728 $25,289 $33,710 $19,118

Tax on income $4,353 $7,356 $4,931 $6,199 $2,824

Accused Skinner 2006 2007 2008 2009 2010

Taxable income $87,660 $109,400 $62,674 $76,286 $54,554

_{Tax on income $25,457 $33,936 $15,712 $20,291 $11,052}

[441] On the other hand, the Crown’s case is that income at the following levels

_{was not declared to the Revenue:}

63 Relying on the decision of the Court of Appeal in Gill v R (1999) 19 NZTC, 526.

Accused Rowley 2006 2007 2008 2009 2010

Not returned $4,450 $110,725 $105,000 $11,000 $65,000

_{Tax evaded $867 $41,809 $37,151 $2,995 $18,690}

Accused Skinner 2006 2007 2008 2009 2010

Not returned $13,350 $341,575 $470,010 $55,500 $180,000

_{Tax evaded $5,206 $133,214 $183,304 $21,645 $67,627}

The Crown’s case therefore is that Mr Rowley failed to return $296,175 of income in the five years concerned and Mr Skinner some $1,060,435. The Crown says that Mr Rowley thus evaded payment of some $101,514 of tax and Mr Skinner some

$410,998.

[442] The Crown led evidence from Mr Heberley, an IRD investigator, relating to expenditure by Mr Skinner on his credit cards. That showed that in the same period (in which Mr Skinner had declared taxable income of $390,576) he spent some

$2,070,035 on his credit cards. That included some $724,981 on international travel,

$390,336 on overseas accommodation and $168,412 at restaurants and bars overseas. Mr Rowley’s spending was far more modest, and was largely applied to meeting his revolving credit account and paying off a mortgage.

Defence case

[443] The accused contend that they did not provide false information to the Revenue, and that the tax returns were correct. More pointedly, they submit that the Crown has not excluded the reasonable possibility that that is so.

[444] The accused accept that they received, and spent, the money identified by the Crown as having been received by them. They accept, also, that they did not return that money as assessable income in their hands. But they say it is for the Crown to prove those moneys were taxable and assessable in their hands, and that the accused knew that that was so.

[445] The accused submit that the Revenue’s analysis simply allocates amounts received by the accused as assessable income per se. But, said Mr Lennard, the reality was “much more complex”. In the first place, there was evidence before the Court that the accused and their family trusts had advanced funds to KPIL, and on- advanced those funds further to the Kilbirnie Plymouth Trust. It had spent it on various projects: acquisition of floors in the St George Hotel building, a student accommodation block development in Nelson, and the St George O’Reilly development next door to the St George Hotel building. Second, as client money was received – in effect by Mercer Trading or Case Marlow, as off-shoots of the Kilbirnie Plymouth Trust – it in effect was moved back to KPIL and used to retire debt owed to the accused and their trusts. All that was done via the TPS trust account, with the accused cutting the “corner” in drawing direct from that account, rather than paying the money from Mercer Trading to KPIL, and then repaying the accused or their trusts indirectly. Third, the accused say that to the extent some

$1.55 million was paid by them to Ms Madondo, that was money they received in the TPS trust account on trust for MCK and Ms Madondo and which they were obliged to pay to her. The accused submit that moneys received on behalf of Ms Madondo was not their assessable income. Nor is money received by way of repayment by KPIL of loans. It follows from this that the proceeds of the retained portions of payments received into the TPS trust account on account of Mercer Trading, Case Marlow, MCK, He & She Limited and the other distinct legal entities, was not assessable income in the hands of the accused.

[446] Finally, the accused submit that the deeming provision s CB32 of Income Tax Act 2007 is not needed – even if it applied, which they deny. That is because the client payments had always been treated as income, and the receiving entities had returned them as such.

Analysis

[447] I am satisfied that the Crown has proved counts 101 to 110 beyond a reasonable doubt. My reasons for reaching that conclusion are as follows.

[448] First, the scheme in respect of which I have entered convictions on counts 1 to 93, was a fraud on the Revenue. It appears likely to have constituted also a fraud on clients who paid the money on the basis that they were doing so pursuant to a legitimate means of reducing their tax exposure. Only then to find it was nothing of the sort and that they had been reassessed with substantial tax to pay and penalties. However the fraud on the Revenue suffices in itself.

[449] Secondly, the effect of s CB32 of the Income Tax Act 2007 was to make the unremitted retained payment proceeds part of the gross income of the accused. It was required to be declared by them regardless of the entity invoicing (MCK, Mercer Trading etc) or the entity receiving (TPS Trust Limited). All of these were entities within the power and control of the accused. It is immaterial, therefore, whether the accused then directed payment of those funds out of the TPS Trust Limited bank account by way of advance from (say) Mercer Trading to KPIL (which I find to be substantially owned and directed by the accused). The accused say that KPIL was indebted to the accused, so that the money then looped back to the accused by way of repayment of prior advances and was now not income in their hands. All that of course assumes that that in law is what occurred. The evidence shows rather that the accused simply helped themselves to distributions from the TPS trust account without bothering with the niceties of advance and repayment, or any formal documentation. In some cases appearance is in fact reality.

[450] The one bright spot, however, is that the invoicing entities did declare invoice receipts as income. The brightness quickly clouds over, however, when we see that none of these entities actually paid tax of any substance in any of the years concerned. That was because that income was defrayed by the deduction of substantial corresponding expenses. The legitimacy of those expenses could not be weighed in this trial. In the circumstances of this case there must be grave reason to doubt it. Mr Lennard does not suggest, and nor could he suggest, that the short answer to these charges is that the invoicing entities are independent legal persons that have declared their fee income for tax purposes. Were that the case, the s 347 application might have been presented instead on that basis.

[451] There is here no question but the accused gained the possession and control of property (money, which they have spent) which they obtained without claim of right. To take the approach urged by the accused is to enable a fraudster to wash proceeds of a fraud via a further scheme of their own devising so that it ends up with an entity indebted to them, and they avoid payment of tax on the proceeds of that fraud. That would be entirely contrary to the purpose and effect of s CB32, albeit that as proceeds of crime they may eventually be recovered in their entirety under other legislation. Confining myself however to the taxing statute, my view is that s CB32 has a grouping effect. It requires the perpetrators of fraud to declare the proceeds of fraud as income at the point of its receipt into their control, and before redistribution amongst the entities they are using to effect the fraud.

[452] I note that s CB32 was introduced in 1998 to reverse the consequence of a decision of the Court of Appeal in A Taxpayer v Commissioner of Inland Revenue.64

The Court had concluded that an embezzling accountant had no taxable gain, because he had no beneficial interest in the moneys received. The explanatory note to the then Taxation (Tax Credits, Trading Stock and Other Remedial Matters) Bill

1998 said:

The proposed amendments will ensure money and property obtained through fraud, embezzlement, misappropriation or theft is gross income and therefore taxable.

That thrust was retained throughout the passage of the Bill through Parliament. At its second reading the Minister of Revenue, the Rt Hon W F Birch, said:65

This Bill also contains an important tax base protection measure. It ensures that wrongfully obtained money will continue to be taxable. The proposed legislation will apply to money and property that have been stolen or gained through fraud, embezzlement and misappropriation ...

[453] Thirdly, and apart from the above, I find that the accused cannot point to receipts of moneys ostensibly on account of MCK and He & She as money neither in their power and control nor to which they were not entitled by reason of trusteeship

_{to Ms Madondo. I have found as a matter of fact there was no obligation to pay any}

64 Taxpayer v Commissioner of inland Revenue [1997] 18 NZTC 13, 350 (CA). See Chan & Sinester “Tax, Equity and the Priority of Property Law” (2000) 8 NZJTLP 24 and Gupta “Taxation of Illegal Profits in New Zealand” (2008) 14 NZBLQ 168.

65 (2 April 1998) 567 NZPD 8119.

sum to Ms Madondo. To the extent the accused did so, that was their own free choice. Those moneys were first required to be declared by the accused as gross income under s CB32.

[454] Fourthly, it follows that I find that the personal tax returns of the accused in the years 2006 to 2010 were false in as much they did not declare the moneys obtained by them as a consequence of their fraudulent conduct. The word “false” is not defined in the Act. However in R v Gill66 Richardson P said:67

We are satisfied that in the context of s 416(1) “false” simply means “inaccurate” or “incorrect”. There is no need to give the word any mens rea element because the mental element demanded of the offender is determined by the preceding words, “wilfully” and “negligently”.

That approach applies also in relation to s 143B(1)(c).

[455] Fifthly, I am satisfied beyond a reasonable doubt that the Crown has shown that the accused knew that the returns were false. That knowledge can be inferred, as the Crown submitted, from the fact that the accused must have known that they were committing frauds (from which they received benefits), that they received substantial portions of the net benefit of those frauds into their personal accounts (or other associated accounts), that they applied the money to their own personal interests (or those of their associated trusts) and, because, given their knowledge as accountants and tax agents (with a speciality in tax planning), they must have known that income, even if the proceeds of fraud, must be declared to the Commissioner for tax purposes.

[456] In reaching the last of these conclusions I do not accept that the accused were (as they sought to characterise themselves) somewhat dull-witted or out of touch with the fundamentals of tax law. That was a characterisation of convenience, but it is inconsistent with the evidence before me and the tax-focused nature of the practice they engaged in on behalf of clients. As they were at pains to point out, in relation to the great majority of their clients, no problems had emerged. The frauds in this case

_{were focused rather than an endemic feature of their practice.}

66 _{R v Gill (1999) 19 NZTC 15, 526 (CA).}

67 At [20].

[457] Sixthly and finally, I am also satisfied that the accused intended to evade the assessment or payment of tax. “Evade” denotes an element of intent. In Babbington v CIR (No 2)68 Turner J held that an evasive intent involves knowing that the act or omission intended is wrong or acting deliberately or recklessly as to whether or not the act or omission is wrong.69 In Abraham v District Court at Auckland70 the Court of Appeal said:71

The appellant does not appear to have any viable defence to the charges. The appellant accepts that the company filed false GST returns, prepared and signed by him, but says that there was no intention to evade GST as he always intended to rectify the position with the IRD at some future point. But even if this account were to be accepted as credible or possibly credible (which on the facts must be very unlikely), it would not constitute a defence to the charges. Given a taxpayer’s obligations in this context (see R v Gilchrist [2007] 1 NZLR 499 (SC), especially at [9] and [15] – [20]) we consider that the company and the appellant would have had the necessary intention even on the appellant’s version of events. This was not a case of error or oversight in the completion of a return. Rather, at the appellant’s instigation, the company’s income was deliberately under-stated in its returns so that the company did not have to meet its GST obligations as they fell due. There was an intentional avoidance of payment in circumstances where the company knew it was under an obligation to pay. This constitutes an intent to evade - see Wilson v Chambers and Co Pty Ltd (1926) 38 CLR

131, especially at 141 – 142 per Isaac J, and Taylor v Attorney-General

[1963] NZLR 261 at 262 (SC). [Emphasis added].

I accept the submission by the Crown that where the accused knew they were deliberately understating their income in the relevant tax returns (as I have found), then the “only available inference” is that they intended to evade the assessment or payment of tax.

G. CONCLUSION AND SUMMARY OF REASONS

[458] It is for these reasons that I have returned the verdicts set out above. [459] I now summarise my reasons briefly.

68 _{Babbington v CIR (No 2) [1958] NZLR 152 (HC).}

69 _{At p 156.}

70 _{Abraham v District Court at Auckland [2007] NZCA 598.}

71 At [39(b)].

Dishonest use charges

[460] The accused were charged with 89 counts of dishonest use of a document to obtain a pecuniary advantage. I have convicted the accused Barrie Skinner of 80 of those charges and acquitted him of nine. I have convicted David Rowley of 75 of those charges, and acquitted him of 14.

[461] I am satisfied beyond reasonable doubt that, beginning in September 2005, the accused together devised (in conjunction with the co-accused Shaan Stevens) a scheme to invoice clients for services (generally “planning”, “consultancy” or “subcontracting” services) – or in rare instances goods – where there was no underlying supply at all (or in rare instances a supply, but nothing like the face value of the invoice). This scheme was sold to willing and in many (but not all cases) credulous clients of the accused’s accounting and tax planning practice as a means of reducing the amount of tax payable by them. Various explanations for the transactions were offered. The purchase of “tax losses”, for instance. None of those explanations were true. The scheme worked by repaying to clients approximately two-thirds of the face value of the invoices (or payments made in the absence of invoices). But in exchange for that net one-third cost, the clients could claim income tax deductions and GST input credits. The scheme did not work from the clients’ perspective unless they did so. The payments were then accounted for as expenditure in the clients’ financial statements (most of which were prepared by the accused’s accounting practice). A tax deduction followed. The result was a reduction in assessable income returned in the clients’ income tax returns. GST input credits were also claimed, as intended. Various invoicing entities were used. The accused in evidence sought to distance themselves from those entities. They sought to place them instead under the control of Ms Madondo (a Zimbabwean citizen, who lived in New Zealand until December 2007) and another client of theirs, Mr Peter Uren. I find that at all times all the invoicing entities were under the direct control of the accused.

[462] When the scheme started to unravel, new explanations for the transactions were offered. Instead of the services described in the invoices, it seemed clients had instead acquired various real property interests (carpark licences and apartments in

the Wellington CBD) or other contractual obligations necessitating payments. This came as news to all but two clients. The evidence of those two on that aspect I find unreliable. None of these agreements had been signed (apart from one, and I find that occurred in late 2010 after the Revenue investigation was in full swing). I find the new explanations have no foundation in fact. Most notably, the accused tendered in evidence a portable computer hard drive which seemed to show that the property agreements had indeed been created at about their apparent dates. Forensic evidence tendered by the Crown however showed convincingly that the time stamps in the metadata on the portable hard drive had been altered in the period between 24 and 27

April 2012. That is, in the days immediately prior to the commencement of the trial.

Perversion of course of justice verdicts

[463] The accused were each charged jointly with seven counts of wilfully attempting to pervert the course of justice. I have convicted each accused on each and every such charge.

[464] The invoicing scheme began to unravel towards the end of 2009. On

12 April 2010 the Revenue raided the accused’s offices. Twelve Revenue officers attended. A room-by-room search of the offices was conducted. It took 12 hours. Material was seized. Computers were forensically imaged. Such action against a registered tax agency was remarkable. At that point the accused, fully cognisant of their fraudulent conduct, could have been in no doubt that the Revenue investigations might result in charges against them (or their clients). The accused then generated the property transactions and other contract documents, and other correspondence, to suggest a genuine basis for the payments – albeit in terms unrelated to the invoices (which mention no such transactions. Those invoices of course could not be altered once they were in the hands of the client.) The accused then jointly set about seeking to persuade certain clients to justify or explain the payments in those new terms, when interviewed by the Revenue. By this time the clients had been summonsed to compulsory interviews with the Revenue under s 19 of the TAA. Unknown to the accused, one of the clients – a former police officer – made a recording of the meeting he had with Mr Skinner before his s 19 interview on

his iPhone. That recording was played to the Court and showed Mr Skinner counselling the client to give explanations to the Revenue which are irreconcilable with proven facts.

[465] Contrary to plan, most clients told the truth to the Revenue when interviewed. Those that did not made unconvincing liars. One at least confirmed the true position following the interview. Most clients submitted voluntary disclosures to the Revenue, seeking reversal of the deductions and GST input credits hitherto claimed. The accused encouraged them in that course, on the basis that it reduced the level of penalties clients were potentially exposed to.

[466] I am satisfied beyond reasonable doubt in each case that the accused supplied false information (explanations and documents) to their clients with the purpose of deflecting the Revenue from adducing evidence of the true facts regarding those clients’ tax affairs and thereby avoiding criminal prosecution.

False information charges

[467] The accused are charged individually with five counts each of knowingly providing false information to the Commissioner of Inland Revenue in their 2006 to

2010 income tax returns.

[468] As I have just explained in the reasons above, the invoice-writing and payment scheme in respect of which convictions were entered on counts 1 to 93 was a fraud on the Revenue. The proceeds of that fraud, received into the possession and control of the accused form part of their gross income and were required to be declared. They were not so declared. Their personal tax returns were understated. I am satisfied beyond reasonable doubt that the Crown has established that the accused knew that to be the case, and that the accused intended to evade the assessment or payment of tax.

An appreciation

[469] I conclude by thanking counsel. I do not intend to diminish the fine work done by junior counsel if I single out the two leaders. Sadly Mr La Hood, who led for the prosecution, lost his father on the third day of the trial. He returned as soon as he could. His exacting cross-examination of the accused sealed the result in this case. Mr Lennard, although he had past acquaintance with the case, was re-retained for the defence only shortly before trial began. All that could sensibly be said for the accused has been said. The Crown case has been tested vigorously and intelligently.

_{I repeat my appreciation to all counsel for their assistance during this lengthy trial.}

Solicitors:

Crown Solicitor, Wellington

Macalister Mazengarb, Wellington for Accused

Stephen Kós J

R v Rowley & Skinner

Schedule of Verdicts

Counts Client Mr Rowley Mr Skinner Paragraph

Dishonest

_{use charges}

1 Kathy Ertel

2 Kathy Ertel

3 Jamie Wilson

4 Jamie Wilson

5 Harding Electricial Ltd

6 Harding Electricial Ltd

7 Harding Electricial Ltd

8 Harding Electricial Ltd

9 Harding Electricial Ltd

10 Harding Electricial Ltd

11 Harding Electricial Ltd

12 Harding Electricial Ltd

14 Esk Contractors Ltd

15 Esk Contractors Ltd

16 Esk Contractors Ltd

17 Esk Contractors Ltd

18 Esk Contractors Ltd

19 Esk Contractors Ltd

20 Esk Group Ltd

21 Esk Group Ltd

22 Esk Group Ltd

23 Esk Group Ltd

24 Esk Group Ltd

25 Esk Group Ltd

26 Esk Group Ltd

27 Esk Group Ltd

28 Esk Group Ltd

29 Esk Group Ltd

30 Country Theme Franchise Ltd

31 Country Theme Franchise Ltd

32 Country Theme Franchise Ltd

33 Pipitea Street Developments Ltd

34 Pipitea Street Developments Ltd

35 Lorraine Skiffington

36 Lorraine Skiffington

37 Lorraine Skiffington

38 Lorraine Skiffington

39 Leyser Enterprises Ltd

40 Leyser Enterprises Ltd

41 Sharpay Holdings Ltd

42 Sharpay Holdings Ltd

43 Nigel Hall Decorators Ltd

44 Nigel Hall Decorators Ltd

45 Nigel Hall Decorators Ltd

49 Topline Tailors Ltd

50 Topline Tailors Ltd

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty
Not Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty
Guilty
Not Guilty
Guilty
Not Guilty Not Guilty Not Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty
Not Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty
Guilty
Not Guilty
Guilty
Not Guilty Not Guilty Not Guilty

[52] [52] [89] [89] [104] [104] [104] [104] [104] [104]

[104] [104] [152] [152] [152] [152] [152] [152] [152]

[152] [152] [152] [152] [152] [152] [152] [152] [152] [134]

[134] [134] [180] [180] [180] [180] [180] [180] [222] [222]

[234] [234] [252] [252] [252] [270] [270]

Counts

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

Client

Topline Tailors Ltd Topline Tailors Ltd AAA Finance Ltd AAA Finance Ltd AAA Finance Ltd SS Transport Ltd
SS Transport Ltd Vicki Breen Vicki Breen Vicki Breen

Vicki Breen
MQ Property Services Ltd Sunshine State Finance Ltd Sunshine State Finance Ltd Sharon Skinner
Sharon Skinner Sharon Skinner Sharon Skinner Sharon Skinner
Scotty’s Construction Ltd

Scotty’s Construction Ltd Scotty’s Construction Ltd Scotty’s Construction Ltd Scotty’s Construction Ltd Mangiare Foods Ltd Mangiare Foods Ltd Mangiare Foods Ltd Steven Godfrey
Steven Godfrey
Steven Godfrey

Strategic Directionz Ltd Strategic Directionz Ltd Strategic Directionz Ltd Strategic Directionz Ltd Quik’n’Tuff Holdings Ltd BRMVR Holdings Ltd BRMVR Holdings Ltd Conaghan Consulting Ltd Conaghan Consulting Ltd Conaghan Consulting Ltd

Kilbirnie Plymouth Investments Ltd
AGI Motor Sport Ltd
AGI Motor Sport Ltd

Mr Rowley

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty
Not Guilty Not Guilty Not Guilty Not Guilty Not Guilty Guilty

Guilty Guilty Guilty Guilty
Not Guilty Not Guilty Not Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty
Not Guilty Guilty Guilty Guilty

Guilty Guilty Guilty

Mr Skinner

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty
Not Guilty Not Guilty Not Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty
Not Guilty Guilty Guilty Guilty

Guilty Guilty Guilty

Paragraph

[270] [270] [284] [284] [284] [293] [293] [300] [300] [300]

[300] [307] [284] [284] [211] [211] [211] [211] [211] [317]

[317] [317] [317] [317] [270] [270] [270] [329] [329] [329]

[180] [180] [180] [180] [341] [350] [350] [360] [360] [360]

[374] [382] [382]

Perversion

of course of justice charges

94

95

96

97

98

99

₁₀₀

Aaron Gotlieb Lorraine Skiffington Stefan Sirota
Steven Godfrey Douglas Leyser Scott Feasey Aashish Patel

Guilty Guilty Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty Guilty Guilty

[413] [416] [419] [422] [425] [428] [431]

Knowing provision of false information charges

101

102

103

104

105

106

107

108

109

110

N/A N/A N/A N/A N/A Guilty Guilty Guilty Guilty Guilty

Guilty Guilty Guilty Guilty Guilty N/A N/A N/A N/A N/A

[447] [447] [447] [447] [447] [447] [447] [447] [447] [447]