Home | Databases | WorldLII | Search | Feedback High Court of New Zealand Decisions

Waters v Ministry of Economic Development [2014] NZHC 1168 (29 May 2014)

Last Updated: 18 June 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2013-404-000216 [2014] NZHC 1168

JUDGMENT OF ANDREWS J [Application for leave to appeal to the Court of Appeal]

This judgment is delivered by me on 29 May 2014 at 3pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Counsel/Solicitors:

M J Walmsley, Paeroa

Meredith Connell, Auckland

G N Bradford, Barrister, Auckland

WATERS v MINISTRY OF ECONOMIC DEVELOPMENT [2014] NZHC 1168 [29 May 2014]

Introduction

[1] In a judgment delivered on 18 December 2013, I dismissed an appeal by the applicant, Mr Waters, against his conviction and sentence on two charges of being a party to the commission of an offence by Mr Jonathon Mann against s 382 of the Companies Act 1993 (“the judgment”).¹ On 30 January 2014, an application was filed on behalf of Mr Waters, seeking leave to appeal to the Court of Appeal. Submissions for the applicant and the Ministry of Economic Development (“the

Ministry”) were received on 22 April and 30 April 2014, respectively, and have been referred to me for a decision on the papers.

Background

[2] I summarised the background facts in my judgment as follows:²

[3] In February 2007, Mr Mann was convicted on a charge of dishonestly using a document to obtain a pecuniary advantage, under s 228(b) of the Crimes Act 1961. Because this was a crime involving dishonesty (as defined in s 2(1) of the Crimes Act) Mr Mann was, pursuant to s 382(1)(b) of the Companies Act, prohibited for a period of five years after the conviction from being “a director or promoter of, or in any way, whether directly or indirectly, concerned or take part in the management of a company”, unless he first obtained the leave of the Court.

[4] In January 2010, the appellant (who is a medical doctor) and Mr Mann became flatmates. At that time, Mr Mann told the appellant that he was interested in starting a business to make health products (a muscle balm), but was unable to do so because he was prohibited from being a director of a company. The appellant invested in the business and in July

2010 was issued shares in two companies IHO Holdings Limited (“IHO Holdings”) and IHO Limited (“IHO”). In all, the appellant invested

$100,000 in the business, and advanced it a further $40,000.

[5] In February 2011, Mr Mann asked the appellant to be a director of the companies. The appellant agreed, and was appointed a director of IHO Holdings on 1 February 2011, and a director of IHO on 21 February 2011. He remained a director until his resignation in August 2011.

[6] On 29 June 2012, Mr Mann pleaded guilty to two charges of taking part in the management of IHO and IHO Holdings.

¹ _{Waters v Ministry of Economic Development [2013] NZHC 3463.}

² At [3]–[6].

Application for leave to appeal

[3] Because the charges against the applicant had not been finally determined before 1 July 2013, the Summary Proceedings Act 1957 continues to apply, rather than the Criminal Procedure Act 2011.³ Pursuant to s 144(1) of the Summary Proceedings Act, the applicant may, with leave of this Court, appeal to the Court of Appeal “against any determination of the High Court on a question of law arising in any general appeal”. Section 144(2) provides that the High Court may grant leave “if in the opinion of that Court the question of law involved in the Appeal is one which, by reason of its general or public importance or for any other reason, ought to

be submitted to the Court of Appeal for decision”.

[4] The questions of law on which the applicant seeks leave to appeal were expressed differently in his application for leave to appeal, and in Mr Bradford’s submissions in support of the application. I set out below the questions of law (“the questions”) as expressed in Mr Bradford’s submissions:

The questions of law are:

(a) Did the prosecution in the District Court, in terms of s 66(1) Crimes Act 1961, prove beyond a reasonable doubt that the Applicant had the necessary mens rea required to prove the charge, in particular:

1. had actual knowledge of the essential matters which constituted the offence intended by the principal, and

2. with that knowledge, intentionally abetted the principal with the intention that the principal commit the intended offence.

(b) Was the learned Judge in the High Court correct to rule at paragraph [48], “as noted earlier it is immaterial if the Applicant did not know that Mr Mann’s actions were in breach of s 382 of the Companies Act”?

(c) Were statements made by the interviewing officer to the Applicant, as regards the actions of the principal, in the absence of other evidence, actually evidence of what the principal had done to offend s 382 Companies Act? In this case the Applicant gave evidence at the trial in the District Court that disputed Mann ran the company, disputed that he failed to take measures to prevent Mann from being involved, and disputed that the company failed as a result of the Applicant’s conduct. Should the prosecution have actually called evidence on the matters retailed to the Applicant by the interviewer which were essentially hearsay?

³ See Criminal Procedure Act 2011, s 397.

(d) Is a finding that the Applicant breached a duty not to act in a way which contravened s 134 Companies Act 1993, in respect of which he was never charged or tried, something that ought properly to have been considered when determining whether the Crown discharged its obligation to prove beyond a reasonable doubt the charge before the Court?

(e) Was the learned Judge in the High Court correct to hold that no miscarriage of justice resulted to the Applicant as a result of relevant and cogent evidence not being called in the District Court? That evidence tending to [establish] that Mann was a conman and had a modus operandi involving dishonesty.

Submissions

[5] Mr Bradford submitted that the issues raised in this appeal which are of public or general importance are:

(a) To incur secondary liability under s 66(1) of the Crimes Act does the party needs to know what the principal offender intends?

(b) Are statements by a person investigating offending, in the absence of any other evidence, actually evidence of what the principal has done to offend against s 382 of the Companies Act? In this respect, Mr Bradford referred to the judgment of the Court of Appeal in R v Halligan, in which the Court said:⁴

... police officers cannot be allowed to introduce evidence for the Crown by making accusations to a suspect, and, when they receive no damaging admission in reply, retailing to the jury what they said as if it were relevant evidence.

Mr Bradford submitted that it is of public or general importance whether police officers or analogous people are to be permitted to adduce “evidence” in this way.

(c) Is it proper to find that a defendant has breached a section of the Companies Act (in this case s 134) without that defendant ever being charged and tried for such an offence, and is such a finding sufficient

to discharge the Crown’s obligation to prove mens rea or actus reus in a prosecution such as this.

[6] Mr Bradford submitted that the public has an interest in how people are convicted of offences under the secondary participation provisions of s 66 of the Crimes Act. He submitted that the findings in the judgment reflect an approach which does not require the party convicted under s 66(1) to know what the principal intended, allows a party to be found to have breached provisions of the Companies Act not having been charged with such offending, and permits “retailing” of statements by the interviewing officer as if they were relevant evidence. He submitted that how the state conducts a prosecution is of public and general importance and that leave should be granted for an appeal to the Court of Appeal.

[7] For the Ministry, Ms Blythe submitted that leave should not be given. In respect of question (a), she submitted that the question, as posed, is a question of fact not a question of law. However, on the basis that the issue raised by the applicant is whether the elements set out in (a)(i) and (ii) are a correct formulation of what the prosecution needs to prove under s 66(1) of the Crimes Act, she submitted that the elements required to be proved for s 66(1) are that the defendant:

(a) Had actual knowledge of the essential matters which constituted the offence committed by the principal; and

(b) Had an intention or purpose to help or encourage the principal to do the acts which constitute the offence.⁵

[8] Ms Blythe submitted that the law is clear the the defendant does not need to know that the principal is committing an offence. She referred to Adams on Criminal Law in which it is stated that “it is immaterial that the secondary party may

_{not know that those acts amount to an offence”.}⁶ _{Accordingly, she submitted,}

⁵ _{See Bruce Robertson (ed) Adams on Criminal Law (looseleaf ed, Brookers) at [CA 66.19].}

⁶ Citing R v Gill (1999) 19 NZTC 15,526 (CA); Cardin Laurant Ltd v Commerce Commission

[1993] NZLR 563 (HC); Megavitamin Laboratories (NZ) Ltd v Commerce Commission (1995) 6

TCLR 231 (HC); and van Niewkoop v Registrar of Companies [2005] 1 NZLR 796 (HC).

question (a) does not require further answer. She further submitted that question (b)

likewise does not require an answer, as it is answered by the answer to question (a).

[9] Regarding question (c), Ms Blythe submitted that this raises a question of law which is not applicable to the fact situation in the present case, as it was not a case where the only evidence of what the principal had done came from statements made by the interviewing officer. She submitted that the applicant had also made admissions in his interview as to what Mr Mann had done (set out at [32] of the judgment) and that was what the District Court had relied on in convicting the applicant and the High Court in upholding the conviction on appeal.

[10] Ms Blythe further submitted that there had been no violation of the rule set out in Halligan because in this case, the interviewing officer had received damaging admissions in reply from the applicant. Ms Blythe further submitted that, in any event, it was accepted at the defended hearing that the issue was not whether Mr Mann had participated in managing the companies, but whether the applicant knew about this and had aided and/or abetted it. While certified copies of Mr Mann’s convictions had been produced in evidence, further evidence of his involvement in the management of the companies was not adduced, because there was no need to. Accordingly, she submitted, the applicant is seeking to have the Court of Appeal consider a hypothetical situation that does not arise in the present case.

[11] In respect of question (d), Ms Blythe submitted that in the District Court, the Judge had found that the applicant “had a duty and an obligation as a director of the companies to ensure that his knowledge of Mr Mann’s prohibition translated into intervention on his part ... to proscribe and control the actions of Mr Mann in a way which would limit his role and could properly demonstrate his engagement only as

an employee and nothing more”.⁷

[12] Ms Blythe also noted that at [41] of the judgment I observed that the applicant had (rightly) not appealed this finding, and went on to observe that pursuant to s 134 of the Companies Act a director is “required to not act, or agree to

the company acting, in a matter that contravenes the Companies Act”. Ms Blythe further submitted that s 134 is not an offence provision, so the applicant could not have been charged under it. In the circumstances, she submitted, no question of law arose which requires answer by the Court of Appeal.

[13] Finally, in respect of question (e), Ms Blythe submitted that a similar point had been advanced in the High Court, and considered at [20]–[24] of the judgment. She submitted that this is not a question of law, and that it was not held that “no miscarriage of justice resulted to the applicant as a result of relevant and cogent evidence not being called in the District Court”. Rather, it was held that evidence sought to be called on appeal was irrelevant and inadmissible.

Discussion

[14] In his judgment for the Court of Appeal in R v Slater, Thomas J set out the general principles to be applied when considering applications for leave to appeal under s 144:⁸

[The statutory question is] is there a question of law which, by reason of its general or public importance or for any other reason, ought to be submitted to this Court for decision.

...

Section 144 was not intended to provide a second tier of appeal from decisions of the District Court in proceedings under the Summary Proceedings Act. Parliament intended such proceedings to be brought to finality with the defendant having an appeal to the High Court other than when the conditions it has specified in subss(2) and (3) are met and leave to appeal is granted. Neither the determination of what comprises a question of law, nor the question whether that point of law raises a question of general or public importance, are to be diluted.

[15] In this case, I accept that question (a) does not raise a question of law that ought to be submitted to the Court of Appeal for decision. The law as to what must be proved for a prosecution under s 66(1) has been set out in a number of decisions. Nor, for the same reason, should question (b) be submitted to the Court of Appeal for decision.

[16] I accept Ms Blythe’s submission that question (c) does not arise on the facts of the present case. As recorded at [32] of the judgment, “the only evidence led in relation to Mr Mann’s actions was the statements made by the [applicant] in the interview”. The applicant’s statements were then set out. At [33] of the judgment, reference is made to the applicant’s evidence at trial, and it is recorded that the applicant accepted that:

... Mr Mann was working on design and marketing material for the companies (described by the [applicant] as “critical for the success of the company”), communicating with the company’s major manufacturer, completing Customs paperwork, maintaining contact with distributors, importers and exporters, and could incur debt on behalf of the company by making orders. Further, [the applicant] accepted that Mr Mann was present at discussions regarding the running of the company.

[17] The factual situation set out in the question is different from that which applied in this case. I accept Ms Blythe’s submission that in this question, the applicant is attempting to have the Court of Appeal consider a hypothetical situation that does not arise in this case, and that, as such, it is not a question which should be submitted to the Court of Appeal for decision.

[18] Regarding question (d), I accept Ms Blythe’s submission that no question of law arises which should be submitted to the Court of Appeal for determination. As Ms Blythe submitted, s 134 of the Companies Act is not an offence provision, and the applicant could not have been charged or tried under it. I also accept Ms Blythe’s submission that the reference to s 134 was simply an observation that in addition to being in breach of s 382 of the Companies Act (the offence provision), the applicant had failed to act in accordance with s 134.

[19] Finally, with respect to question (e) it is clear from the judgment that evidence sought to be adduced on appeal was held to be irrelevant and inadmissible. It was not held that “no miscarriage of justice resulted” as a result of evidence not being called in the District Court. I accept Ms Blythe’s submission that the finding that such evidence was not admissible on appeal is not a question of law which should be submitted to the Court of Appeal for determination.

Result

[20] I have concluded that none of the questions set out for the applicant raise questions of law which, for reason of their general or public importance or for any other reason ought to be submitted to the Court of Appeal for decision. The application for leave to appeal to the Court of Appeal is therefore dismissed and

_{leave to appeal is declined.}

Andrews J