Raea v Commissioner of Inland Revenue [2012] NZHC 2064; (2012) 25 NZTC 20-142 (15 August 2012)

Last Updated: 4 September 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2010-404-000446 [2012] NZHC 2064

JAMES COLIN RAEA

Appellant

v

COMMISSIONER OF INLAND REVENUE

Respondent

Hearing: 7 August 2012

Counsel: Appellant in person

K Wendt for Respondent

Judgment: 15 August 2012

_{JUDGMENT OF ASHER J}

This judgment was delivered by me on Wednesday, 15 August 2012 at 4pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Crown Solicitor, DX CP24063, Auckland 1140. Email: [e-mail]

Copy to:

JC Raea, 16 Monet Grove, West Harbour, Auckland 0618. Email: [e-mail]

RAEA V COMMISSIONER OF INLAND REVENUE HC AK CRI-2010-404-000446 [15 August 2012]

Introduction

[1] On 3 July 2008 the appellant James Colin Raea was convicted on 18 charges laid under the Tax Administration Act 1994. He had earlier pleaded guilty to other charges. The charges related to failures to file returns, the supply of false information and the misapplication of PAYE. Mr Raea applied for a stay following the convictions, and this was declined on 13 November 2008. Eventually after various other hearings he was sentenced on 22 October 2010 to two years and six months’ imprisonment.

[2] He initially filed an appeal against conviction and sentence. However, he has by letter withdrawn his appeal against sentence. He has also not proceeded with any specific challenge to the entry of the convictions. Rather, his focus has been to challenge the refusal to grant a stay. He has, following a minute from this Court, identified the questions that he raises on the appeal as follows:

Did the conduct of PDS meet the definition of being egregious?

Did the conduct of Garth O’Brien [Raea’s trial counsel] meet the definition of being egregious?

Did the conduct of the [Inland Revenue Department] amount to prosecutorial misconduct and/or breach of their obligations under TAA?

Given these efforts and barriers as a self represented Appellant. Is the Appellant able to have a fair trial under s 25(a) [of the New Zealand Bill of Rights Act 1990]?

[3] Mr Raea sought to have this appeal determined on the papers. Ms Wendt for the respondent had opposed this. I determined that there should be a hearing and at an oral hearing received brief submissions from both Mr Raea and Ms Wendt.

Background

[4] The appellant was a chartered accountant and had some 12 years experience undertaking property developments through various companies. He was the sole director of each company and the shareholders were typically other companies or trusts associated with him. He operated the bank accounts and controlled the

companies. Through 2002 to 2005 he had developed and sold various properties and the charges against him primarily relate to the failure of those companies to file tax returns.

[5] Around 200 charges were laid against Mr Raea in 2006 alleging various offences under ss 143A and 143B of the Tax Administration Act 1994 (“the Act”). As a result of the discussions between the parties Mr Raea subsequently pleaded guilty to 102 of the charges and not guilty to 18 charges. The remaining charges were withdrawn.

[6] A defended hearing commenced in relation to the 18 charges on 5 November and went through to 8 November 2007 at the Waitakere District Court before Judge Field. The hearing was adjourned to 3 December 2007 for closing submissions.

[7] The Court was unable to allocate resources immediately for the purposes of the resumed hearing. Ultimately closing submissions were made some six months later on 4 June 2008. Judge Field delivered his judgment on 3 July 2008. He found that the 18 charges were proved and held that Mr Raea be convicted.

[8] Mr Raea had been represented by Mr Garth O’Brien up to this point. However, he now instructed a different counsel, Ms M Pitch. With sentencing pending the appellant applied to the Court for a permanent stay of proceedings on the ground of systemic delay. This was heard on 13 November 2008. Judge Field, in an oral judgment delivered that day, declined to grant the application. He accepted that there was regrettable systemic delay between November 2007 and June

2008, but concluded that a stay was not justified. Mr Raea was remanded to

4 December 2008 for sentencing.

[9] Mr Raea then applied for a rehearing in respect of the 18 defended charges and for an order that 81 of his guilty pleas be vacated. He asserted that he had not been advised by his counsel Mr O’Brien of his right to elect trial by jury. He claimed that he had been inadequately advised and that there was an arguable defence available to him. That application was heard on 12 March 2009 before Judge Field. Mr Raea and Mr O’Brien gave evidence.

[10] On 26 March 2009 in a reserved decision Judge Field accepted Mr O’Brien’s evidence and declined the appellant’s application for a rehearing. He was satisfied that Mr Raea had made an informed decision concerning election. On the vacation of plea issue, the Judge accepted that guilty pleas to some of the charges had been entered under a misapprehension on Mr Raea’s part as to the potential penalty. The Judge held that those particular pleas should be vacated and put to the appellant again for election and plea. Those charges were subsequently withdrawn by Inland Revenue. The Judge refused to vacate the remaining pleas.

[11] Finally, on 22 October 2010 Mr Raea appeared for sentencing before Judge

Field. The Judge noted that the 18 tax evasion charges involved a figure of

$654,416.49. He had pleaded guilty to other charges where the amount involved was

$15,554.72. The total amount involved in the tax evasion was therefore nearly

$670,000. The Judge found that there was a “chronic and habitual repetition of dishonesty for significant financial gain at the community’s expense”.[1] The Judge took into account the fact that there was no evidence of an extravagant lifestyle and that he had instead been diverting money that was owed to Inland Revenue to pay other creditors. He fixed a starting point of four years’ imprisonment.

[12] The Judge then noted the delays that had taken place in completing the hearing and considered that a reduction of six months was appropriate to recognise the delay and additional stress that arose. He also considered repayments of approximately $280,000 that had been made by Mr Raea, which he observed warranted a further deduction of six months. He then went on to consider his good work in the community and good record and deducted yet a further six months. The end sentence was therefore a sentence of two years and six months’ imprisonment.

Approach to the appeal

[13] The stay application was heard after the conviction appeal. The Crown accepts that the stay judgment can be legitimately challenged in this appeal. I am

_{prepared to treat the appeal as including the stay judgment even though it was after}

the conviction. It was observed by Giles J in Grigson v Ministry of Fisheries[2] following McGechan J in Black v Fulcher[3] that an order is appealable if made in the course of a determination or decision. The test is not purely temporal and an order may be regarded as being challengeable on appeal if it is so closely linked with the

process of deciding the information that it can be properly described as made in the course or process of doing so.

[14] Like Miller J in his earlier short judgment[4] in relation to an unsuccessful application for leave to adduce further evidence, I accept that this Court’s appellate jurisdiction under the Summary Proceedings Act 1957 extends to a District Court order refusing a stay. I accept that, in circumstances such as these, that may be so even when a stay has been sought and refused after the conviction has been entered. The alternative prospect of separate appeals against the various decisions is unattractive. The multiple decisions can be all seen as part of the process of determination of the charges. Ms Wendt for the respondent has helpfully accepted that this is the correct approach.

[15] In his submissions Mr Raea has not limited himself to the four questions that he has put to the Court as the questions to be determined in the appeal. He appears to attack the justice system generally, including access to resources in prison, legal aid funding and perceived failings of the Public Defence Service. He claims that the Public Defence Service failed to address various issues for sentencing purposes. He challenges a decision of Brewer J on 1 June 2012 where in the callover he had considered and rejected an application by Mr Raea for the appointment of amicus curiae. The Judge had observed:

Mr Raea appears from the documents that I have seen to have a very clear grasp of his case and I am of the view that the Judge who presides at the appeal will have little difficulty in identifying the issues and the law which [are] applicable.

[16] Mr Raea has not appealed that decision and has not filed an application to review it and I do not consider that he can now raise as a ground of appeal the failure

_{to appoint an amicus curiae. In any event I would observe that I would respectfully}

agree with the decision made by Brewer J. It was not appropriate to appoint an amicus curiae, given the relatively straightforward factual basis of Mr Raea’s complaints.

[17] Mr Raea has also reiterated his allegations of trial counsel misconduct that he had raised when he sought to change his pleas before Judge Field. Judge Field’s judgment of 26 March 2009 rejected the allegations against Mr O’Brien and determined that Mr Raea had made an informed decision concerning the election. That decision has not been the subject of any appeal and Mr Raea has not sought specifically to challenge the reasoning. This issue having been determined on the basis of a credibility finding by the Judge, it is not open to Mr Raea to continue to complain about Mr O’Brien’s conduct.

[18] This is a general appeal which I will approach it in accordance with the principles set out in Austin, Nichols & Co Inc v Stichting Lodestar.[5] On the general appeal issue I must reach my own view on the merits of the appeal and form my own opinion as to the acceptability and weight to be given to the evidence. In doing so I may recognise the advantage that the District Court Judge had in seeing and hearing the witnesses in relation to issues of credibility. I note that the essence of the appeal is the claim that the Judge was wrong not to grant a stay, and that the essential ground put forward to support the stay on this appeal was prosecutorial misconduct,

which was not raised before Judge Field as the primary complaint, as it is here. In relation to the stay itself, that was the exercise of a judicial discretion, and subject to the more stringent appeal regime that applies. Nevertheless, given the wide and undisciplined nature of Mr Raea’s allegations I form my own opinion on all the appeal issues.

[19] I note as a general proposition that Mr Raea has shown no basis on which it can be concluded that there has been a miscarriage of justice in any of Judge Field’s decisions, that is, that the outcome would have been any different had the matters he complained about not occurred. By way of example, I accept Ms Wendt’s submission that the appellant although he alleges that he was depressed at the time of

the offending and that this is relevant, has not put forward any medical evidence to support this proposition.

Prosecutorial misconduct

[20] As best as I can discern from Mr Raea’s lengthy submissions which cover 79

pages, the prosecutorial misconduct alleged is as follows: (a) backdating tax assessments;

(b) overstating tax;

(c) misleading the Court regarding certain shareholdings; (d) deliberately altering a statement of position;

(e) refusing to call a witness that Mr Raea maintains could have explained why Mr Raea had completed the IR40 form in the way he did; and

(f) proceeding with sentencing on an indictable basis.

[21] To establish prosecutorial misconduct it is necessary, as it is in relation to any allegation of counsel misconduct, to show that the conduct has given rise to a miscarriage of justice.[6] It must therefore be shown that something has gone wrong with the trial and that what has gone wrong must have led to a real risk of an unsafe verdict.

[22] There is no new evidence presented to me. There is nothing on the file indicating in any general way any prosecutorial misconduct. It is necessary then to turn to the more specific allegations.

Backdated tax assessments

[23] Mr Raea makes a serious allegation that there were backdated tax assessments prepared by the Inland Revenue prosecutors. However, no evidence was provided to support this contention and I reject it.

Overstated tax

[24] Mr Raea alleged that the Inland Revenue grossly overstated the tax owed by the companies in its assessments. While Mr Raea says that he believes the tax assessments in relation to the companies were incorrect, it is clear that he was aware of his obligations in relation to tax and his rights in relation to disputing and questioning tax assessments.

[25] It is clear from the material before the Court, and in particular the judgment of Judge Field dated 3 July 2008, that Mr Raea was a chartered accountant who had knowledge of and understood the relevant tax procedures. Inland Revenue had written to him advising of his right to dispute the assessments in relation to the companies but Mr Raea did not do so. He did take some steps to query his personal tax assessments but these were not progressed. Inland Revenue deemed the tax assessments to be indisputable pursuant to s 109 of the Act.

[26] There is quite simply no evidence before the Court that the assessed amounts were incorrect or overstated. There is certainly no evidence of any deliberate overstatement and therefore prosecutorial misconduct on the part of Inland Revenue.

The IR40 charge

[27] Mr Raea was convicted on one charge of providing false information in an IR40 form, which is the statement of financial position form. He had failed to advise Inland Revenue that he owned certain shares. There was evidence before the Court that in an earlier application he had declared that he owned shares valued at

$250,000 in a company called North Western Investment Holdings Ltd which had a shareholding in another company Thompson Group Ltd.

[28] There is nothing to indicate that the evidence of providing false information was in any way misleading, or that he did not own the shares personally.

Altered statement of position

[29] Mr Raea argues that the prosecution deliberately altered a statement of position produced in evidence in the District Court by cutting off the top of the form which had on it “Bradley Associates”. The appellant has not provided any exhibit folder or page number and it is not clear to what he refers. Nor is it clear how this document was relevant to the entry of the convictions, and it is not explained how this can be relevant to the allegation of prosecutorial misconduct.

Summary versus indictable charges

[30] Mr Raea also raised in the course of submissions the fact that the Judge was misled into thinking that the charges before him were laid indictably. There is no evidence that the Judge was under this misapprehension. The end sentence imposed of two and a half years’ imprisonment was well below the five year restriction imposed by s 17 of the Summary Proceedings Act. There were numerous charges, and the end sentence would have taken into account the totality principle.

Backdating of documents

[31] There are also some general allegations in the submissions that Inland Revenue backdated certain correspondence. There was no specificity in Mr Raea’s allegations. Ms Wendt produced for cross-examination if necessary all the persons to whom Mr Raea had referred in this regard. He did not seek to cross-examine any of them and did not provide any further support for his allegations.

[32] There is no basis then for the assertion that Inland Revenue backdated documents.

Legal aid

[33] Mr Raea appears to complain against a system which did not provide him with legal aid. However, he acknowledged in the course of his submissions that he stopped pursuing a legal aid application when he was asked to fill in “yet another form”. The decision not to continue to pursue a legal aid application appears to be his alone. This is not a basis for allowing the appeal.

Other matters

[34] It is also alleged by Mr Raea that Inland Revenue had “refused to produce Staccini” following the filing of an affidavit. Mr Staccini was Mr Raea asserts an Inland Revenue employee who could have given evidence that may have assisted him by showing that he had misled him as to how the form could be completed.

[35] However, the plain fact is that Mr Raea did not call Mr Staccini or subpoena him. Further it is not possible to see how, as alleged, Mr Staccini misled Mr Raea.

[36] In Mr Raea’s lengthy submissions he complained about other matters. He referred to the alleged bundling of evidence, the lack of datestamps on Inland Revenue mail, the lack of evidence as to when Inland Revenue letters were sent, the evidence of various witnesses including Mr O’Brien and a Ms Verstoep, and the fact that Inland Revenue registered charging orders.

[37] Despite the fact that Mr Raea appears to nurse a sense of grievance in relation to these matters, it is not stated in his submissions how these are relevant to the Judge’s convictions or findings, or the refusal to grant a stay.

The stay itself

[38] There was undoubtedly six months delay and Judge Field found this to be undue.[7]

[39] It is clear from Williams v R[8] that a stay will only be granted on the basis of undue delay where the delay has been egregious. Like Judge Field I do not accept that the delay in this case fell into that category. It appears to be attributable to a combination of court administration and the numerous steps that the appellant took. The total period at six months was comparatively modest.

[40] The delay was taken into account on sentencing, and a six month discount resulted. In the circumstances it has not been shown that there was any basis for Mr Raea’s assertion that the proceeding should have been permanently stayed on the basis of delay.

Result

[41] Mr Raea’s allegations and complaints have been very general in their form and unsupported by references to evidence. He has failed to show any error on the part of Judge Field in any of his decisions, or any prosecutorial misconduct or errors by defence counsel. The only matter in respect of which he could have had a legitimate complaint was the six month delay, and that has been generously provided for by the six month deduction in sentence.

Result

[42] The appeal is dismissed.

...................................

Asher J

---

[1] Inland Revenue Department v Raea DC Auckland CRI-2007-090-11760, 22 October 2010 at [4].
[2] _{Grigson v Ministry of Fisheries [1998] 3 NZLR 202 (HC) at 215.}
[3] _{Black v Fulcher HC Wellington M 233/86, 6 August 1986.}
[4] Raea v Commissioner of Inland Revenue [2012] NZHC 496; (2012) 25 NZTC 20-118 (HC) at [6].

[5] Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [5],

[13] and [16].

[6] See Sungsuwan v R [2005] NZSC 57, [2006] 1 NZLR 730 at [6] and [110] in the context of an

appeal against conviction.

[7] R v Raea DC Auckland CRI-2008-090-11760, 13 November 2008

[8] Williams v R [2009] NZSC 41, [2009] 2 NZLR 750 at [18].