Szondy v District Court at Auckland [2012] NZHC 2295 (7 September 2012)

Last Updated: 14 September 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-001733 [2012] NZHC 2295

UNDER the Judicature Amendment Act 1972, Part

30 of the High Court Rules, the Extradition Act 1999, the New Zealand Bill of Rights Act 1990 and the District Courts Act 1947

IN THE MATTER OF of an application for judicial review

BETWEEN GYULA BELA SZONDY Plaintiff

AND THE DISTRICT COURT AT AUCKLAND First Defendant

AND THE REPUBLIC OF HUNGARY Second Defendant

Hearing: 30 July 2012

Judgment: 7 September 2012

_{JUDGMENT OF GILBERT J}

This judgment was delivered by me on 7 September 2012 at 10.00 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:

Counsel: G M Illingworth QC, Auckland: [e-mail]

A J V Rogers, Auckland: [e-mail]

J C Gordon SC, Auckland: [e-mail]

G R Kayes, Auckland: [e-mail]

_{P J Gunn, Wellington:} [e-mail]

Solicitors: Meredith Connell, Auckland McLeod & Associates, Auckland Crown Law, Wellington

SZONDY V THE DISTRICT COURT AT AUCKLAND HC AK CIV-2012-404-001733 [7 September 2012]

[1] The Republic of Hungary requests the extradition of Mr Szondy in relation to

16 counts of fraud relating to personal loans he procured in Hungary from 2001 to

2003. The essential allegation is that Mr Szondy borrowed the money knowing that he had no realistic prospect of being able to repay it in breach of s 318(1) of the Criminal Code of the Republic of Hungary which provides: “The person who – for unlawful profit-making – leads somebody into error or keeps in error and causes damage thereby, commits fraud”. The punishment for this offending is set out in s 318(2) and depends on the level of damage caused and other circumstances including whether the fraud was committed “in a business-like manner”.

[2] In a careful and closely reasoned reserved judgment delivered on

15 March 2012, Judge A A Sinclair determined that Mr Szondy was eligible for surrender under the Extradition Act 1999 in relation to four of these counts.

[3] Mr Szondy applies for judicial review of this decision on the grounds that the alleged offending is not an extradition offence under the Act and, in any event, the Judge was wrong to find that a prima facie case had been established.

[4] The Republic of Hungary contends that the alleged offending comes within the crime listed in art II(6) of the extradition treaty between New Zealand and the Republic of Hungary[1] namely, “obtaining money or goods by false pretences”. Mr Szondy conceded this in the District Court. However, that concession does not bind Mr Szondy and the Judge was required to consider whether his concession was correct.[2] Mr Szondy now argues that his concession was wrong and that the offences with which he is charged do not come within the treaty because they do not allege that he obtained money by false pretences.

[5] The Republic of Hungary argues in the alternative that the relevant charges come within the 1938 amendment to the treaty[3] which provides that extradition may

_{be granted at the discretion of the requested “High Contracting Party” in respect of}

offences punishable according to the law of both High Contracting Parties by not less than two years’ imprisonment. Mr Szondy acknowledges that the relevant offending is punishable by not less than two years’ imprisonment in Hungary and in New Zealand. However, he argues that the discretion has not been exercised and accordingly extradition may not be granted under the 1938 amendment. Mr Szondy says that the discretion must be exercised by the British monarch as the High Contracting Party. The Republic of Hungary disagrees. It contends that the High Contracting Party is New Zealand and that the relevant discretion is to be exercised by the Minister of Justice.

[6] The issues are therefore:

(a) Do the charges come within the offence listed in art II(6) of the treaty?

(b) If not, who is the “High Contracting Party” for the purposes of the

1938 amendment?

(c) Does the discretion referred to in the 1938 amendment have to be exercised before a Judge can determine whether the alleged offending comes within the amendment?

(d) Was a prima facie case established?

Do the charges come within the offence listed in art II(6) of the treaty?

[7] In United States of America v Cullinane[4] the Court of Appeal clarified the proper approach when considering an extradition request under a treaty which enumerates extradition offences, as in this case. The offences listed in a treaty employing the enumerative approach replace the test for an extradition offence under s 4 of the Act. This is because s 4, which defines extradition offences, is expressly subject to an extradition treaty. The Court’s enquiry in such a case is whether the

_{alleged conduct satisfies the requirements of the treaty. The treaty should be given a}

liberal interpretation so as to give effect to its object and intent. The Court of Appeal noted that s 5(2) of the Act requires the Court to consider whether the totality of the acts or omissions alleged to have been committed come within the description of the offence in the relevant article of the treaty. The Court should not focus on the nomenclature of the offences or on the constituent elements of them.

[8] Mr Illingworth QC, for Mr Szondy, submitted that s 5(2) of the Act does not apply in this case because it simply elaborates the meaning and purpose of s 4(2) which in turn solely relates to the meaning and purpose of s 4(1)(a). I can understand the logic of Mr Illingworth’s submission. As he says, s 4(1)(a) does not apply in this case because the treaty employs the enumerative approach. It follows that s 4(2) does not apply either because it simply sets out the condition referred to in s 4(1)(a). Section 5(2) stipulates the approach to be taken in making the determination required by s 4(2).

[9] However, I do not agree with Mr Illingworth that the approach directed in s 5(2) should not be applied when considering whether the alleged offending comes within one of the offences enumerated in the treaty. On the contrary, I consider that this approach is required to ensure that the object and intent of the treaty is met. I can see no justification for adopting the approach mandated by s 5(2) for the purpose of determining whether alleged conduct is an extradition offence within the meaning of s 4 but not taking that same approach when considering whether alleged conduct is an extradition offence under the relevant treaty. The purpose of the treaty is to bring to justice those who are guilty of grave crimes committed in either of the

contracting states.[5] This purpose is best achieved by having regard to the totality of

the acts or omissions alleged to have been committed and ascertaining whether such conduct fits within the offences listed in the treaty. It does not matter if the offence charged by the requesting state contains additional elements, as in the present case where damage must also be proved.[6] It is not necessary for there to be a precise match between the offence charged by the requesting state and the offence listed in

_{the treaty.}

[10] This is also how I interpret what the Court of Appeal was saying in Cullinane. The Court stated, at [55], that in cases of treaties employing the enumerative approach the “proper enquiry for a Court faced with an extradition request made by [the relevant party] is therefore whether the alleged conduct satisfies the requirements of the [relevant] treaty...”. And, at [67], “the focus is not on the nomenclature of the offences nor on the constituent elements of the offences. The focus at this stage is on whether the totality of the acts or omissions alleged to have been committed comes within the description of the offence in [the relevant article], interpreting the words in [the relevant article] in the manner described above”.

[11] Mr Szondy argues that the Hungarian charges do not allege that he obtained money by false pretences. Rather, he claims they simply allege that he “committed fraud causing a considerable damage in a businesslike manner”. However, this ignores the full wording of the relevant charges. The Republic of Hungary alleges that Mr Szondy “led the injured parties into error and kept them in error for unlawfully making pecuniary profit”. Specifically, it is alleged that he obtained money from the lenders by fraudulently misleading them into believing that he would repay them when he knew that he could not. As Ms Gordon SC for the Republic of Hungary said, an essential element of an offence under s 318 of the Criminal Code is that the fraud must be committed “for unlawful profit-making”. In my view, the alleged conduct falls within the offence of obtaining money by false pretences in terms of art II(6). This is precisely what Mr Szondy is alleged to have done. I consider that Mr Szondy was right to concede this point in the District Court. It follows that the Judge made no error in accepting his concession.

[12] Having answered the first question in the affirmative, I do not need to consider questions 2 and 3 as to whether the alleged offending comes within the

1938 amendment.

Was a prima facie case established?

[13] Mr Illingworth pointed out that the evidence showed that Mr Szondy had previously been engaged in a variety of business activities and had previously been

reliable in repaying money he had borrowed. In these circumstances, he submitted that a crucial step in the Judge’s reasoning was her finding that Mr Szondy’s only assets when he obtained the relevant loans were his car and an insurance policy. He submitted that there was no evidential basis for this finding and that the Judge overlooked evidence of Mr Szondy’s assets and earning capacity including that:

(a) He held a leading position in an insurance company as a contract manager.

(b) He was buying a plot of land.

(c) He had a car accessory shop and traded spare parts for automobiles. (d) He was engaged in the purchase, renovation and re-sale of real estate. (e) He was renovating a flat and purchasing a new one.

(f) He had an apartment.

(g) He wanted to do business with a chocolate factory. (h) He was engaged in a building project.

[14] Mr Illingworth submitted that the only real evidence that Mr Szondy lacked assets from which he could repay the loans came from a government employee who investigated Mr Szondy’s affairs. This witness tried to ascertain Mr Szondy’s real and personal assets so they could be seized. Her evidence was that his house had been transferred to one of his creditors. The only asset she could find in Mr Szondy’s name was the car he had driven out of the country when he “disappeared”. Mr Illingworth submitted that this investigation must have been carried out well after Mr Szondy obtained the relevant loans and that the Judge was wrong to draw any inference from this evidence that Mr Szondy did not honestly believe that he would be able to repay the loans at the time he obtained them.

[15] Mr Kayes, who argued this part of the case for the Republic of Hungary, submitted that the Judge was entitled to find that a prima facie case had been established. He submitted that the Judge did take into account the evidence summarised in [13] above. This is correct. The Judge referred to this evidence in her judgment.

[16] Mr Kayes acknowledged that the evidence did not establish the date of the investigation by the government employee however he pointed to evidence in the record indicating that the investigation was undertaken in mid-2004, not long after Mr Szondy departed Hungary on 28 November 2003. In these circumstances Mr Kayes submitted that the Judge was entitled to take this evidence into account in considering whether a prima facie case had been established. I agree.

[17] Mr Kayes referred to other evidence that the Judge was entitled to rely on in finding that a prima facie case was established. This included the evidence that Mr Szondy had transferred the family home to one of his creditors in 2002 because he was unable to repay his debts. In early January 2003, Mr Szondy told another creditor that he was “short of money”. He told yet another creditor later in 2003 that he was not able to repay her loan. Mr Szondy “disappeared” in November 2003 soon after telling a work colleague that he was “in a big trouble”.

[18] The Judge also took into account that Mr Szondy gave a number of different explanations as to why he needed these loans. These included: to buy a plot of land; for his business; to renovate his flat and purchase a new flat; to purchase goods for his car accessory shop. Mr Szondy told another creditor that he should invest money in his real estate business.

[19] When considering whether a jury could find that Mr Szondy knew that he was unable to repay the relevant borrowings at the time he procured them, the Judge considered the evidence referred to in the context of Mr Szondy’s existing commitments pursuant to the various loans he had already arranged. The Judge took into account the total amount of these loans, the dates for repayment and the interest rates payable. She noted that a number of these loans were already overdue and that

Mr Szondy had offered to pay unusually high rates of interest to secure the new loans.

[20] In my view the Judge was justified in concluding that there was sufficient evidence to enable a properly directed jury to convict Mr Szondy on the relevant counts. She did not disregard relevant evidence. In any event, she was obliged to consider whether there was sufficient evidence upon which a jury could convict if such evidence was accepted and inferences most favourable to the prosecution were drawn. The Judge’s reasoning process was not flawed and her decision was reasonable.

[21] I conclude that the Judge did not make any error of law in finding that the relevant charges faced by Mr Szondy fell within art II(6) of the treaty. Nor did she make any error in concluding that a prima facie case had been established. The application for judicial review must accordingly be dismissed.

Result

[22] The application for judicial review is dismissed. Judgment is entered for the defendants on the claim.

[23] Any application for costs should be made by memorandum within 14 days of the date of this judgment. Any memorandum in reply should be filed and served

_{within 14 days thereafter.}

M A Gilbert J

---

[1] The Treaty Between the United Kingdom of Great Britain and Ireland-Hungary for the Mutual

_{Surrender of Fugitive Criminals.}

[2] _{Edwards v United States of America [2002] 3 NZLR 222 (CA) at [13].}

[3] The Hungary (Extradition: New Zealand) Order in Council 1938.

[4] United States of America v Cullinane [2003] 2 NZLR 1 (CA) at [67].

[5] _{R v Governor of Ashford, ex parte Postlethwaite [1988] 1 AC 924 (HL) at 946-947.}

[6] Cullinane above n4 at [82].