Tusa v Police [2014] NZHC 2589 (22 October 2014)

Last Updated: 19 November 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2014-404-90 [2014] NZHC 2589

BETWEEN	RACHEL TUSA Appellant
AND	NEW ZEALAND POLICE Respondent

Hearing:	13 October 2014
Counsel:	J Bragg for Appellant B Northwood for Respodent
Judgment:	22 October 2014

_{JUDGMENT OF FOGARTY J}

This judgment was delivered by me on 22 October 2014 at 1.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ...............................

Solicitors: Public Defence Service, Manukau City

Meredith Connell, Auckland

TUSA v NEW ZEALAND POLICE [2014] NZHC 2589 [22 October 2014]

[1] The appellant was convicted after a trial before Judge G Andrée Wiltens on three counts of theft. It was a theft of almost $40,000 from her employer. She appeals against conviction. The appeal is on the grounds of a miscarriage of justice.

[2] At the hearing of the appeal, she sought to adduce evidence of three persons who would be called as witnesses on her behalf should the conviction be set aside and the charges be directed to be reheard.

[3] Ms Tusa was an employee of Spazio Casa Limited. Spazio Casa imports and retails tiles, bathroom and kitchen tap ware, along with vanity units and baths. Its head office, warehouse and major showroom are in Auckland. It has at least eight franchised retail outlets from Queenstown to Whangarei. As I understand it, it does not sell retail from its head office. This fact is important.

[4] In January 2010, the company was investigated by the Commerce Commission regarding alleged contraventions of the Fair Trading Act, being categorised as:

(a) Price guarantee representations. (b) Unique produce representations.

(c) Failure to adequately disclose the price on its website.

(d) For misrepresentations of country of origin representations.

[5] The fourth point is relevant to this prosecution. Spazio Casa imported a mix of stock from Italy and from China. The complaint was that it was selling its goods as made in Italy. Forty per cent of its bathroom product was made in Italy, with the majority of the remainder manufactured in China; 95 per cent of the tap ware was made in China.

[6] Spazio Casa entered into a settlement with the Commerce Commission. On

9 November 2010, accepting in the agreement for settlement that it was representing, for example, all Spazio Casa taps as manufactured in Italy to Italian design; that it had not disclosed anywhere on its website or in its brochure that approximately 60 per cent of its product was manufactured in China.

[7] The charges of theft against the defendant were that between 26 December

2009 and 5 June 2010, she stole bathroom ware valued at $24,905; on 20 May bathroom ware valued at $5,392.35; and 18 May bathroom ware valued at $9,172.69.

[8] The appellant accepted that she posted these items for sale as an employee on Trade Me and that she received the funds into her own bank. Her defence was that the director, Parlo Cozzolino, gave her instructions to sell the items on Trade Me “to get rid of them”.

[9] The trial proceeded in two hearings; one on 20 June, the other on 9 July 2013. On the second day of hearing, it was adjourned part-heard as the Judge considered he needed more information about the Commerce Commission investigation. This was obtained and the proceedings concluded thereafter by way of submission.

[10] In his judgment, the trial Judge found as a fact that Mr Cozzolino had not asked Ms Tusa to sell specific items of stock to assist the company in its dealings with the Commerce Commission. Mr Cozzolino particularly denied the suggestion that she should make sure there was no trace back to the company and scoffed at the suggestion that he had also said she could retain the proceeds of almost $40,000. He said that the thefts came to light when an employee, Michael, told him he had found discrepancies in the accounts.

[11] The Judge rejected Ms Tusa’s evidence that she had been instructed to sell the products surreptitiously and permitted to retain the proceeds. She said they flew in the face of Mr Cozzolino’s denials and the fact that he was money-centred. He could not accept that the company would have effectively allowed Ms Tusa to double her annual salary by this means or to pick up the delivery costs. He rejected the

suggestion that the Commerce Commission investigation was behind the need to sell these items off surreptitiously.

[12] There were three grounds of appeal as follows:

(a) That fresh evidence was now available and the evidence was such that it might reasonably have led to a finding of not guilty if it had been called at the trial;

(b) The Judge erred in failing to direct Parlo Cozzolino be recalled to give evidence relating to the Commerce Commission investigation. As a result a miscarriage of justice has occurred as this produced an unfair trial given the inability of the defendant to cross-examine him on this subject; and

(c) The Judge erred in his assessment of the evidence to such an extent that a miscarriage of justice has occurred.

Fresh evidence

[13] The appellant seeks the Court to examine the evidence of three witnesses: Mr G K Adams, who with his wife were the owners of the Christchurch franchise of Spazio Casa from 2008. The important piece of his evidence is to contradict the evidence of Mr Cozzolino that the offences were brought to his attention by Michael in July 2010. He says that there was only one Michael employed by Spazio Casa Limited and he was employed by Mr Adams who, after he had sold his franchise, began working directly at head office in 2011. Mr Adams said he employed Michael McLeod in 2011 and supervised him as his general manager.

[14] Mr Adams also gives evidence that the only other persons who could have identified any accounting inconsistencies were three other persons, one of Russian descent and the other two of Indian descent, one of whom is a female. The only other European male working in the accounting department was a person who left before 2009.

[15] The significance of this evidence is that it is said to support the case for the defence that at all material times, Mr Cozzolino knew that in 2010 the appellant was selling Chinese-made stock surreptitiously on Trade Me. That his explanation that he learned of it because it had been reported to him by an employee, particularly Michael, is simply not possible.

[16] The explanation given as to why Mr Adam was not called as a witness was that at the time the appellant thought he was still working for Spazio Casa. The second affidavit is by Mr Adam’s wife, Ms Pile. She essentially corroborates her husband’s evidence.

[17] The third witness would be Mr Kozak. He is a software expert. He was previously the managing director of a company called Verde who were contracted by Spazio Casa to implement a “Greentree” software solution. He was asked to give an opinion on the likelihood that Ms Tusa, as an employee of Spazio Casa, could have created a sales order in “Greentree” which was picked up and dispatched by the warehouse on the basis of a packing slip, invoiced it and then subsequently deleted the order, dispatch docket, invoice and manually adjusted stock. It is his opinion this scenario was not at all likely.

[18] Sections 232(2)(c) and (4) of the Criminal Procedure Act 2011 provide:

232 First appeal court to determine appeal

...

(2) The first appeal court must allow a first appeal under this subpart if satisfied that,—

...

(c) in any case, a miscarriage of justice has occurred for any reason.

...

(4) In subsection (2), miscarriage of justice means any error, irregularity, or occurrence in or in relation to or affecting the trial that—

(a) has created a real risk that the outcome of the trial was affected; or

_{(b) has resulted in an unfair trial or a trial that was a nullity.}

...

[19] Ms Bragg, relied upon the recent dictum of the Privy Council in Lundy v R:¹

120. The Board considers that the proper basis on which admission of fresh evidence should be decided is by the application of a sequential series of tests. If the evidence is not credible, it should not be admitted. If it is credible, the question then arises whether it is fresh in the sense that it is evidence which could not have been obtained for the trial with reasonable diligence. If the evidence is both credible and fresh, it should generally be admitted unless the court is satisfied at that stage that, if admitted, it would have no effect on the safety of the conviction. If the evidence is credible but not fresh, the court should assess its strength and its potential impact on the safety of the conviction. If it considers that there is a risk of a miscarriage of justice if the evidence is excluded, it should be admitted, notwithstanding that the evidence is not fresh.

[20] Ms Bragg accepted, in the course of oral argument, that the proposed evidence was not fresh, in the sense that it could not have been obtained for the trail with reasonable diligence. Rather, she relied on the last two sentences of that paragraph and, thus, on the question of the safety of the conviction and the risk of a miscarriage of justice.

[21] There had been a contest during the trial as to whether or not the appellant had deleted false orders. In order to dispatch goods, the computer system required orders to be created. Mr Cozzolino had given evidence that he did not notice the false orders because the sales orders could be deleted under the “Greentree” system. Mr Cozzolino’s suggestion being that Mr Tusa was deleting the sales orders created under the Greentree system and therefore hid her offending. This is part and parcel of the defence that the appellant was selling these goods in the knowledge of Mr Cozzolino and the proposition that it only came to light when he engaged Michael is a fabrication.

[22] Ms Bragg argued that the appellant lost an opportunity to cross-examine

Mr Cozzolino after the Court had received the Commerce Commission documents. There was no further hearing. Rather, submissions were received. But there was no

¹ Lundy v R [2014] 2 NZLR 273 at [120].

application by the then counsel for Mr Cozzolino for a further hearing to cross- examine Mr Cozzolino.

[23] The merit of the appeal then came to rest on the third ground, the risk of a miscarriage of justice.

[24] The Judge found in [23] and [25] of the judgment:

[23] Ms Tusa’s explanation to Constable O’Shaunessy was that the items of stock sold were all Chinese, were no longer to be traded by the company, were end-of-runs, and/or disposed of to side-step the Commerce Commission investigation into false advertising by the company where it was alleged China-produced stock was mis-described by the company as Italian.

[25] Ms Tusa confirmed that what she said in interview was correct. She considered Mr Cozzolino was giving her “hush” money – to hide from franchisees that the “Italian” bath ware was in fact from China. She testified that Mr Cozzolino would not have been able to divest the company of the unwanted stock by way of sales as the head agreement with all franchisees prohibited discounted sales of any kind.

Analysis

[25] The charges of theft were substantially within the period of investigation of the Commerce Commission from January 2010 to November 2010. Ms Bragg submits further that the defence should not be over-simplified by saying that the motive of the complainant was to get rid of Chinese stock. It included getting rid of unwanted stock. That part of the context to keep in mind was that it was in breach of agreements with the franchisees for Spazio Casa to sell retail.

[26] This is a case that turned on credibility. Essentially the defence was that the complainant knew of these sales and the prosecution case was that the complainant did not know, let alone approve of the sales, and that the sales were concealed. That then brings the focus onto the evidence of the complainant that he received the information of the thefts from an employee called Michael. Michael was not called as a witness.

[27] If it can be proved that it could not have been Michael who informed Mr

Cozzolino of these sales, then the question squarely arises is, how did Mr Cozzolino

know of them if, as he says, they were concealed? The answer to that question goes directly to the competing credibility of the two witnesses – the complainant and the defendant. The question of whether or not the sales could be concealed is a related, relevant, but not as significant a point.

[28] Mr Cozzolino’s statement to the police, his complaint, was made on

27 October 2010. In that complaint he states it was around 20 July 2010 that it was noticed there was an unpaid invoice generated from head office.

[29] This complaint is made twelve days before the settlement agreement was signed with the Commerce Commission. It was made, however, well after that agreement was negotiated. On 25 June 2010 Spazio Casa’s lawyers wrote to the Commerce Commission recording its full cooperation and looking forward to receipt of a draft settlement agreement and ending, “thanking you for your assistance in achieving an agreed settlement”.

[30] There was an opportunity for Mr Cozzolino to be recalled and cross- examined after the Judge had received the Commerce Commission material. I am left with an unease as to the safety of this verdict. I consider that there is a risk of a miscarriage of justice if Mr Cozzolino is not further cross-examined. For that reason, the conviction will be set aside and there will be a retrial. The fact that there will be a retrial obviates the need for any rulings as to the admission of the evidence of the additional three proposed witnesses.

[31] The appeal is allowed accordingly.