R v Bublitz [2016] NZHC 2863 (29 November 2016)

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PAUL NEVILLE BUBLITZ BRUCE ALEXANDER MCKAY RICHARD TIMOTHY BLACKWOOD LANCE DAVID MORRISON

Hearing:	21 and 22 November 2016
Counsel:	D Johnstone, B Finn and D Robinson for the Crown R Reed and H Ford for Mr Bublitz G Bradford, K Barron-Afeaki and S Withers for Mr McKay S Kilian, D Dufty and F Hawkins for Mr Blackwood Mr Morrison in person J Dixon as Amicus Curiae
Judgment:	23 November 2016
_Reasons:	_{29 November 2016}

This judgment was delivered by me on Tuesday, 29 November 2016 at 3:30 pm pursuant to r 11.5 of the High Court Rules.

[1] We have just completed week 16 of this Judge-alone trial. The Court has sat for more than 70 working days almost continuously. The four defendants are charged with numerous offences under the Crimes Act 1961 and the Companies Act

[2] The time allocated for the trial was 12 weeks. The Crown estimates that its case will not now finish until late February next year. The length of the defence case is unknown, but the Crown submits that the two defence witnesses already signalled, an investment banker and an expert on accounting standards, should not take more than two and a half weeks. These estimates are, in my view, quite inadequate. It is entirely possible on the present progress of the trial that the evidence will not be completed until May or June next year. This is unnecessarily burdensome on all concerned.

[3] It is against this background that three of the four defendants have made applications for a stay of proceedings for abuse of process, largely because of the length of the trial. I heard argument on the applications on 21 and 22 November

23 November 2016, I dismissed the applications and instead dismissed Charges 2, 6,

7, 10, 11, 14, 18, 19, 21, 24, 27, 28, 32, 34, 38, 40, 42 and 44 under s 147 of the Criminal Procedure Act 2011 (CPA). In addition, I discharged Mr Morrison on Charge 26. This left 19 charges against the four defendants. Because some of the charges are faced by more than one defendant, 32 verdicts are still required. The trial is to proceed on these charges alone. At the time I indicated that my reasons would follow. These are my reasons.

[4] The original Crown charge notice contained 49 charges. The principal defendant, Mr Bublitz, faced all 49 charges. Mr McKay faced 41 of the 49 charges. Mr Blackwood faced 28 charges, while Mr Morrison faced seven charges. One hundred and twenty five verdicts would therefore have been required on the original

charge notice. In the seventh week of trial, at the Crown’s invitation, I dismissed

12 charges under s 147 of the CPA. These charges were largely double ups, which charged the same transactions as being in breach of both the Mutual trust deed and the Crown deed of guarantee. Then in the 10^thweek of trial, again at the Crown’s invitation, I discharged Mr Bublitz, Mr McKay and Mr Blackwood on a further 22 charges on which they had been jointly charged with others. This was largely because they had been charged as parties with no direct role in the transactions, the

subject of the charges. This did not alter the total number of charges, which remained at 37. Because most of the 37 charges were faced by more than one defendant, a total of 66 verdicts were still required.

[5] Although only containing 37 charges, the Crown charge notice at the time of the present applications was 86 pages in length because some of the charges contained up to three pages of particulars, which are part of the charges. The Crown submitted that its case had then been pared back to its bare essentials. I did not agree. There were charges relating to every prospectus and investment statement issued by both finance companies in the relevant period. There were charges which were superfluous. For example, Charge 11 related to an e-mail to an investor attaching a copy of an investment statement when there was already a charge relating to that investment statement. Three pages of particulars setting out all of the alleged false statements in an offer document are also, in my view, excessive. The gravamen of the Crown’s allegations should be able to be expressed much more succinctly.

[6] Charging documents were originally laid on 11 March 2014. They were first called in the District Court on 7 May 2014. No pleas were entered. On

29 September 2014 the matter was called again and pleas of not guilty were entered. By December 2014, the defendants had received the primary brief of the Crown’s principal prosecution witness, Jason Weir, an investigating accountant from Deloitte, which comprised of 488 pages plus appendices. The defendants had also received a very considerable amount of disclosure.

[7] On 3 December 2014 a case management memorandum signed by the Crown and counsel for Mr Bublitz estimated the trial would require 50 to 60 days if Judge- alone, but much longer if tried by jury.

[8] On 4 February 2015 the matter was called at the High Court for the first time. It was set down for a 12 week trial to commence in February 2016. Numerous pre- trial matters were timetabled for April 2015. By minute dated 4 February 2015, Lang J stated after a trial review at which all the defendants were represented by counsel:

[2] I allocate the proceeding a fixture of 12 weeks duration commencing on 9 February 2016. The issue of trial duration will be revisited at trial callover.

[9] In March 2015, trial callover memoranda were filed. The Crown memorandum estimated the duration of the prosecution case at 60 days. In his memorandum, counsel for Mr Bublitz noted the estimated trial duration of 12 weeks, but stated that experience in other finance company trials would suggest that the trial may end up exceeding its allotted time. However, counsel for Mr Bublitz advised that, at that stage, counsel was unable to confirm whether Mr Bublitz would be giving or calling evidence. He advised that counsel would, of course, advise the Court and all parties once in a position to do so.

[10] Callover took place before Moore J on 1 April 2015. All defendants were represented by counsel.¹The estimated time for trial was not subsequently varied, nor did any counsel indicate that the defendants would give or call evidence.

[11] In November 2015, Mr Bublitz applied to adjourn the trial. The Crown opposed. On application by Mr Bublitz and for reasons advanced by him in the application, Venning J vacated the February trial date and set a new trial date of

¹Counsel for Mr Bublitz at callover was not his present counsel who came into the case late.

[12] On 8 August 2016, the Crown opened its case with a day long address. The Crown then called its principal witness, Mr Weir. Although the Crown had filed his original brief of evidence with the Court, he had completed two further supplementary briefs, which were not filed with the Court. Defence counsel objected to the provision of Mr Weir’s briefs to the Court as the Crown had indicated that it was not going to follow the format of the briefs, but lead his evidence in a somewhat different manner. The defence also did not disclose how long cross- examination of Mr Weir might take. The Court was therefore unable to accurately estimate how much time would be required to hear his evidence.

[13] Except for the insertion of seven other witnesses over a period of eight and a half days when Mr Weir was unavailable or other witnesses needed to be accommodated, Mr Weir did not finish giving his evidence until the Friday afternoon of week 12. The Crown then proceeded to call its other witnesses.

[14] Among the further witnesses to be called, the Crown intends to call an expert witness, also from Deloitte, on the issue of accounting standards. His brief of evidence is 255 pages in length. The essential technical documents to which he will refer are contained in another volume of similar length.

14 November 2016. He is, however, unwell and the Crown has advised the Court that he will probably be unable to give evidence this year. The Crown, therefore, intends to call him to give evidence when the Court resumes hearing in the New Year. In the meantime, the Crown is continuing with its other witnesses.

[16] In accordance with their obligations under the Criminal Disclosure Act, the defence has provided a brief of evidence from their own expert on accounting standards who is to give evidence in reply to that of the Crown expert. His brief of evidence is 200 pages in length.

[17] The Crown expert refers extensively to Mr Weir’s brief of evidence as the factual basis for many of his opinions. That factual basis was extensively challenged

in cross examination of Mr Weir and, no doubt, the Crown expert will be cross- examined at some length about the validity of his opinions as a consequence.

[18] The Crown submits that the slow progress has arisen by combination of the density of the Crown’s evidence in chief and the exhaustive cross examination undertaken by defence counsel. It acknowledges that with the benefit of hindsight the 12 week estimate was plainly inadequate. In the context of the pre-trial procedural regime established under the CPA, there must be at least some sharing of responsibility between the parties for the inadequacy of the estimate of trial length.

[19] Mr Bublitz applies for an order staying the proceedings against him for an abuse of the Court processes on the grounds that allowing the trial to continue would undermine public confidence in the integrity of the criminal justice system and that the circumstances of the current trial require the Court to act to prevent its own

[21] Mr McKay also applies for a stay of proceedings or discharge pursuant to s 147 of the CPA. The principal ground advanced by Mr McKay relies on the circumstances relating to the availability of the Crown expert witness. Those circumstances are said to amount to an “emergency” or “force majeure” requiring the Court to intervene in order to preserve fair trial rights. It is apparent from the medical certificate tendered by the expert’s physician that it may be some weeks before it is known whether he will be fit to give evidence when the Court resumes in the New Year.

[22] Counsel for Mr McKay estimates that the trial will extend for a further four months from the first sitting day in the New Year. This would mean that the evidence would not be completed until late May or early June 2017.

[23] Mr Morrison also applies for a stay or dismissal of all the charges remaining against him on the grounds that continuation of the trial amounts to an abuse of process. He submits that to continue with the trial would give rise to the appearance of unfairness and bring the administration of justice into disrepute.

[24] Mr Morrison submits this has already been a very long trial and it still has a long way to go. At best he estimates that we are looking at a trial length of 28 to

30 weeks, but undoubtedly there are scenarios where it could take significantly longer than that, perhaps more than three times as long as the original estimate. Mr Morrison submits that although length is not necessarily synonymous with complexity, here it plainly is. There are lots of different strands to the case, numerous different transactions and sharply conflicting views as to the purpose, effect and consequences of them. Extensive expert evidence has been and is intended to be called by both sides.

[25] Mr Morrison makes a number of other points. Among them is that the Crown’s poor estimate of the length of the trial has deprived him of the prospect of making a decent argument for severance. If instead of its 12 week estimate the Crown had given a more realistic one – say 28 to 30 weeks – then Mr Morrison says he would have applied for severance and he believes he would have had a realistic prospect of obtaining that as he was a minor defendant who only ever faced seven

charges. He also refers to himself as the accidental director and points to unfairness when compared to other directors, as well as the unfairness of his interview and the lack of any proper investigation as to his role. Mr Morrison submits that any one of the factors identified might on its own not be sufficient to justify a stay, but he submits that the Court needs to look at a combination of factors as well as the factors that the other defendants have raised and assess the case as a whole.

[26] In the alternative, Mr Morrison submits that the s 220 charge against him should be dismissed. He also took issue with one of the particulars, a point which was conceded by Crown counsel in oral argument.

[27] The Crown opposes the stay applications, submitting that the applications were misguided. It submits that the requirements for a stay of proceedings are not easily met and have not been met in this case. Fundamentally, no unfairness or prejudice such that a fair trial is not possible has been shown to exist, nor would the administration of justice be brought into disrupt by the continuation of the proceeding. It would, however, if the proceeding was stayed.

[28] The Crown submits that while long trials are invariably burdensome upon the defendants, they are not necessarily unfairly so. It submits that in the present case, defence counsel and Mr Morrison have been entirely able to deal with all issues before the Court and there is no suggestion that any available point has been missed.

[29] The general principles applying to a stay of proceeding are not in dispute. The Crown accepts the general principles outlined in the written submissions for Mr Bublitz as follows:

4 This Court has an inherent jurisdiction to control and regulate its processes and proceedings, including the power to deal with abuse of judicial process. This inherent jurisdiction builds upon express powers conferred on the Court to regulate its own procedure which would include the power to discharge a defendant pursuant to s 147 of the Criminal Procedure Act 2011.

6 There is no exhaustive list of what circumstances will give rise to an abuse of process...While delay, misconduct, re-litigation and non-disclosure may all give rise to an abuse of process, so too clearly will an unfair trial.

7 The power to prevent an abuse of the Court’s process is such that a charge may be dismissed or a stay granted even when the prosecution was instigated in a proper manner. In this regard, the circumstances giving rise to the abuse need not be present from the outset, but can arise after proceedings commence.

9 In addition, the Courts have been clear – most recently in the Supreme Court decision in Wilson v R²– that it is necessary to consider whether there is a remedy short of a stay which will enable the defendant to have a fair trial.

[30] It is clear that the ultimate question is whether a fair trial is possible. This requires an evaluative judgment based on all relevant circumstances.

[31] My evaluation of all the circumstances is that the high threshold for a stay of proceedings has not been met.

[32] As to the submission by Mr Bublitz that it is an abuse of process for the Crown to take a contradictory position on Mr Chevin’s intent and involvement in the trial as compared with its position in the agreed summary of facts to which he pleaded guilty, I am not persuaded that the Crown is inconsistent in its approach.

[33] Mr Chevin pleaded guilty to 10 charges under s 220 of the Crimes Act 1961 alleging that he was a party to the use of investors’ funds in Mutual and to a breach of the Mutual trust deed or Crown guarantee through his role in facilitating certain transactions which he knew were in breach of the Mutual trust deed or Crown guarantee. The type of knowledge accepted by the Crown for the purpose of Mr Chevin’s pleas of guilty and sentence was wilful blindness.

_{investors’ funds in Viaduct. Nonetheless, the Crown allege in
the present trial of}

four other defendants that Mr Chevin was aware even before the purchase of Viaduct that Mr Bublitz, Mr Wevers and Mr McKay planned to purchase Viaduct, which had the benefit of the Crown guarantee, to hold assets and generate liquidity for Hunter Capital in a manner which necessarily involved a breach of the Viaduct trust deed or Crown guarantee because he had discussed it with them. The Crown submits that certain statements made by Mr Chevin can be admitted against the other defendants because he was part of the plan and the statements at issue were made in furtherance of the plan.

[35] There are, in my view, real differences between the two situations. The first is a matter of substantive criminal liability, while the second is a rule of evidence. Criminal liability needs to be proved beyond reasonable doubt, whereas the rule of evidence only requires the Crown to show that there is reasonable evidence that Mr Chevin participated in the plan. Further, I have yet to rule on the existence of a criminal plan and whether any statements made by Mr Chevin are admissible against the other defendants, solely on the basis of the rule of evidence.

[36] In those circumstances there is no substantive unfairness or prejudice to the defendants to warrant a stay of proceedings.

[37] The major complaint by the defendants is that the breadth and complexity of the Crown’s case has led to a trial that is cumbersome and oppressive and which has prejudiced the defendants’ fair trial rights as well as causing undue delay.

[38] As noted earlier, charging documents were first laid two and a half years ago. The trial would have commenced nine months ago had it not been for the application by Mr Bublitz to delay the start of the trial.

[39] I agree with Crown counsel that the blowout in the estimated length of trial is regrettable, but it does not of itself give rise to unfairness. In considering an appeal against convictions, which followed a 17 month criminal trial in England, the Court of Appeal in R v Kellard held that although the trial had been of excessive length, that fact alone did not make the convictions unsafe, otherwise all trials would be

subject to a time limit.³The correct approach was to consider whether the length of the trial created a situation at any point whereby a fair trial was not possible: and in particular whether the case revealed any feature which tended to establish that any of those taking part in the trial were, by reason of its length, unable to discharge their function. The Court of Appeal held that none of these circumstances had arisen. It held that the issues were clear enough, in particular the question of the appellant’s dishonesty, and in spite of its length the trial had been a fair one.

[40] Here, three of the defendants are represented by two or three counsel. Mr Morrison is unrepresented, but has the assistance of an amicus, appointed by the Court. His submissions on the application to stay were focused and clearly set out the issues from his point of view. All defendants have been able to follow the evidence and undertake cross-examination of the Crown witnesses. No obvious points are being missed and alternative interpretations of the documentary material are routinely put forward through the questioning of witnesses.

[41] The defendants also point to what they say is the changing nature of the Crown’s case and the manner in which it is being presented. They submit that valuable resources are being wasted in preparing for cross-examination of witnesses on issues which are no longer relevant against them personally. Counsel for Mr Bublitz gives as an example the charges in respect of the Viaduct offer documents, upon which he has now been discharged. Although there has, no doubt, been an element of wasted costs, those charges were dismissed during the evidence of the first Crown witness.

[42] The Crown has also been criticised for altering it’s case against the defendants by the refinement or removal of particulars, the decision not to call the trustees as witnesses and the invitation to the Court not to proceed with the Mutual trust deed charges, leaving the Crown guarantee charges relating to the same transactions in place.

_{inevitable in a lengthy trial as trial decisions as to the conduct of a
party’s case are}

made or the evidence does not come out as envisaged at the outset. Mr Weir has made some concessions on questioning, but no substantive unfairness has been identified in the present case.

[44] Alleged investigative failings are also put forward as a ground for staying the proceedings. Mr Weir is criticised for not referring to all relevant documents. There were, however, over one million documents on the companies’ server seized by the Financial Markets Authority and at the outset Mr Weir made it plain that he could not and had not reviewed every document on the server for relevance. Instead, he relied on key word searches to identify documents for later presentation.

[45] The defendants also criticised the Financial Markets Authority for its failure to obtain files from the Companies Office, the e-mails of Mr Chevin, the defendant who pleaded guilty shortly before the commencement of the trial, and the e-mails of Mr Wevers, who died shortly after being charged.

[46] The defendants also say that the Crown has been selective in the evidence presented as the Financial Markets Authority interviewed a number of people who the Crown has chosen not to call.

[47] This criticism must however been seen against the huge number of potentially relevant documents and the fact that the trial is already of inordinate length. While I accept that it is indeed impractical to review over one million documents, the defendants themselves have access to search engines which should enable them to identify documents of relevance to their case. The Crown has also offered to call those witnesses it no longer plans to call as part of its case, if required by the defendants. Those persons interviewed by the Financial Markets Authority, but not called by the Crown, can also be summonsed by the defendants to give evidence as part of their case.

[48] There is nothing improper about the Crown choosing not to call witnesses. It retains the burden of proof to a high standard of beyond reasonable doubt.

[49] There were a range of other matters put forward in support of the various applications for a stay of proceedings, which included Mr Morrison’s poor living arrangements on bail during the course of the trial, but either singularly or cumulatively, all the matters raised do not meet the high threshold for a stay of proceedings.

[50] However, in a potentially long criminal trial, a heavy responsibility lays upon the trial Judge and counsel, in particular Crown counsel, to ensure that it remains manageable and of a dimension that enables it to be presented clearly.⁴It is also a recognised aspect of the abuse of process jurisdiction that a Judge should consider any alternative responses short of a stay that may be available to cure any potential prejudice.⁵In considering the defendants’ applications for a stay of any proceedings, I therefore looked closely at alternatives to a stay to enable the trial to remain manageable.

[51] First of all, I gave consideration to the possibility of severance of the charges relating to Mutual Finance Limited from the charges relating to Viaduct Capital Limited. I have jurisdiction to do so under s 138 of the CPA. If an order was made in terms of s 138, this would mean that the charges which are severed from the present trial would be adjourned to a later date. Depending upon the outcome of the present case, the severed charges could either be later dismissed without trial or proceed to an abbreviated trial as all the evidence given to date would be able to be used in that trial. I, therefore, requested counsel to provide me with timelines for various scenarios. Crown counsel estimated that five weeks of hearing time in the present trial would be saved if the Mutual Finance Limited charges were severed from the Viaduct Capital Limited charges and heard later. Counsel for Mr Bublitz estimated that the saving would be in the region of one to two months. Severance was, however, strenuously opposed by all defendants. In the end, I formed the view that the saving of time identified in the present trial was of marginal benefit in the

[52] I also requested counsel to consider the possibility of the Court directing that the two experts meet and prepare, after discussion, a joint statement identifying points of agreement and contention and areas where the Crown is put to proof on matters where a positive case to the contrary is not advanced by the defence.⁶

Counsel did make enquiry of their experts. There were a number of difficulties identified. Firstly, the Crown expert is presently unwell and it is not known when he would be in a position to take a responsible role in such a process. Secondly, Mr Bublitz is now on legal aid and a lengthy and detailed application would have to be made to the legal aid authorities for approval to fund the process. Approval is not guaranteed. Thirdly, as previously noted, many of the Crown expert’s opinions are based on Mr Weir’s factual findings, which are extensively challenged. Again, I formed the view that any saving of time through a direction that the experts meet and agree on common ground was of marginal benefit.

[53] I then asked Crown counsel to identify the charges which represented the gravamen of the allegations against the defendants. I referred to the case of Tuckerman v R in which the Court of Appeal was of the opinion that the number of charges in an indictment laid by the Crown was oppressive and carried with it the possibility of confusion by the jury and the possibility, consequent upon that, of a miscarriage of justice.⁷The Court of Appeal referred to a number of English cases, each of which had reference to the effect of an excessive aggregation of charges in various circumstances. Accordingly, it directed that the impending trial be confined

to such 20 counts as the Crown may select and of which notice is given to the defendant.

[54] In response to my request, Crown counsel provided advice that in the event the trial was not severed and proceeded subject to a direction by the Court that the Crown reduce the number of charges, the Crown would elect to proceed on a specified number of charges. Nineteen charges and 32 verdicts were identified by

_{the Crown as representing the gravamen of the allegations against the
defendants.}

⁶As suggested in the Protocol issued by the Lord Chief Justice of England and Wales on the

Control and Management of Heavy Fraud and other Complex Criminal Cases dated 22 March

[55] Having carefully considered all the circumstances, I considered that the dismissal of the remaining charges for reasons of case management was perfectly proper. I, accordingly, dismissed charges 2, 6, 7, 10, 11, 14, 18, 19, 21, 24, 27, 28,

32, 34, 38, 40, 42 and 44. In addition, I discharged Mr Morrison on charge 26, which is still faced by the three other defendants. I took this step on the basis that otherwise the burden on the defendants, counsel, the Court and all others involved would become intolerable and that scarce public resources would be wasted.⁸

Charges are able to be dismissed under s 147 of the CPA if a trial on them would be

[56] Furthermore, I indicated to counsel that I would take a much more active role in the manner and extent to which witnesses would give evidence. In particular, I have directed that all remaining Crown witnesses who are professional persons such as accountants should, subject to any objection, read their briefs of evidence rather than being led. I also intend to exercise firm control over the timetable where necessary, making clear throughout the remaining weeks of the trial, that the timetable will be subject to appropriate constraints. I am of the view that I am entitled to direct that the trial is expected to conclude by a specific date, with such necessary even-handedness and flexibility as the interests of justice require as the

[57] In doing so, I agree completely with the sentiments of the English Court of

The starting point is simple. Justice must be done. The defendant is entitled to a fair trial: and, which is sometimes overlooked, the prosecution is equally entitled to a reasonable opportunity to present the evidence against the defendant. It is not however a concomitant of the entitlement to a fair trial that either or both sides are further entitled to take as much time as they like, or for that matter, as long as counsel and solicitors or the defendants themselves think appropriate. Resources are limited. The funding for Courts and Judges, for prosecuting and the vast majority of defence lawyers

⁸By comparison, the trial of three defendants following the collapse of South Canterbury Finance Limited (which resulted in a payout by the Crown to investors 100 times larger than in the present case) lasted 71 days. It involved 12 charges of which the principal defendant faced only nine, and a total of 18 verdicts.

⁹Simon France (ed) Adams on Criminal Law – Procedure (looseleaf ed, Thomson Reuters, Wellington) at [CPA 147.06] citing Long v R [1995] 2 NZLR 691, (1995) 13 CRNZ 124 (HC).

is dependent on public money, for which there are many competing demands. Time itself is a resource. Every day unnecessarily used, while the trial meanders sluggishly to its eventual conclusion, represents another day’s stressful waiting for the remaining witnesses and the jurors in that particular trial, and no less important, continuing and increasing tension and worry for another defendant or defendants, some of whom are remanded in custody, and the witnesses in trials which are waiting their turn to be listed. It follows that the sensible use of time requires judicial management and control.

High Court of New Zealand Decisions

R v Bublitz [2016] NZHC 2863 (29 November 2016)