Bublitz v Solicitor-General

[2020] NZHC 2476

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2014-004-002293

[2020] NZHC 2476

BETWEEN

PAUL NEVILLE BUBLITZ

Applicant

AND

SOLICITOR-GENERAL (THE CROWN)

Respondent

Hearing:

2 September 2020

Appearances:

D Johnstone for the Crown

R Reed QC and Y Wang for the Respondent

Judgment:

22 September 2020

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Tuesday, 22 September 2020 at 3:00 pm.

Registrar/Deputy Registrar

Solicitors:           Beca & Co (R Beca), Auckland for the Applicant

Meredith Connell (Office of the Crown Solicitor), Auckland Counsel:     R Reed QC, Auckland

BUBLITZ v SOLICITOR-GENERAL (THE CROWN) [2020] NZHC 2476 [22 September 2020]

[1]    Mr Paul Bublitz applies for costs under the Costs in Criminal Cases Act 1967 (CCCA) in respect of charges he faced during an aborted first trial, which were either dismissed during the first trial or on which he was acquitted following a second trial. He says the charges were inappropriately brought and pursued by the Crown because they lacked underlying merit. He also says the nature and number of the dismissed and acquitted charges was disproportionate to the actual scope of criminality, which imposed an unfair cost burden on the defence.

[2]    Mr Bublitz’s application for costs is opposed by the Crown. It has filed its own application under the CCCA seeking costs in the same amount against Mr Bublitz.

Earlier costs judgment

[3]    Mr Bublitz applied for costs following the aborted first trial, but before the second trial.  I awarded Mr Bublitz $10,000 in respect of a disclosure failure under   s 364 of the Criminal Procedure Act 2011 (CPA), but refused costs under the CCCA as I considered that the appropriate time to hear Mr Bublitz’s CCCA application was after all charges against him had been heard and determined.1 The Court of Appeal subsequently dismissed an appeal from my decision.2 The Supreme Court then refused leave to appeal.3

Charges of which Mr Bublitz was convicted

[4]    The second Judge-alone trial concluded on 5 February 2019 with verdicts of guilty against Mr Bublitz on six charges. He was acquitted on six charges.4 Of the  six charges on which he was convicted, four were theft by a person in a special relationship. Mr Bublitz had control over investor funds in Mutual Finance Ltd (Mutual) and knew that he could only deal with the funds in accordance with the requirements of the Crown under a replacement Crown guarantee. Nonetheless, he intentionally dealt with the funds otherwise than in accordance with the Crown’s requirements when he arranged for the purchase by Mutual of a number of loans from Viaduct Capital Ltd (Viaduct) or arranged for loan advances to be made from Mutual

1      R v Bublitz [2018] NZHC 373 [Earlier costs judgment (HC)].

2      Bublitz v R [2019] NZCA 379 [Appeal against earlier costs judgment (CA)].

3      Bublitz v R [2019] NZSC 139 [Leave to appeal against earlier costs judgment (SC)].

4      R v Bublitz [2019] NZHC 222 [Verdicts judgment (HC)].

to a related party. The thefts occurred over a four-month period and involved a total of approximately $1.17 million. Of this total, $310,000 has been repaid by the borrowers, leaving a loss to the Crown of approximately $860,000.

[5]    The other two charges of which Mr Bublitz was convicted were making or concurring in making a false statement in Mutual’s initial 3 March 2010 prospectus and as subsequently amended by memorandum dated 28 April 2010. The Crown alleged that the prospectus failed to disclose breaches of the initial and replacement Crown guarantees, and the consequent risk of the guarantee being withdrawn at short notice.

[6]    On appeal, the Court of Appeal upheld the four charges of theft by a person in a special relationship, but acquitted Mr Bublitz of the two prospectus charges on the basis that investors’ funds remained secured by the Crown guarantee regardless of whether Mutual was in breach of it during the currency of the prospectus.5

Sentencing

[7]    The trial Judge, Toogood J, adopted a starting point for Mr Bublitz on the theft charges of four years and six months’ imprisonment.6 He uplifted that by nine months for the prospectus charges, making an overall starting point of five years and three months’ imprisonment.

[8]    The Judge then reduced the final starting point by 30 per cent because he was satisfied that there had been a significant punitive element in the way in which the criminal prosecution had been undertaken, without ascribing blame or responsibility to anyone.7

[9]    The Judge then applied  a  further  discount  of  10  per  cent  to  recognise  Mr Bublitz’s previous good character, some remorse and his cooperation. The consequences of those discounts for Mr Bublitz was that from a starting point of five

5      Bublitz v R [2019] NZCA 364, [2019] 3 NZLR 533 [Appeal against conviction and sentence (CA)].

6      R v Bublitz [2019] NZHC 592 [Sentencing judgment (HC)].

7 At [93].

years and three months’ imprisonment, the application of a total discount of 40 per cent reduced his sentence to three years and two months’ imprisonment.

[10]   On appeal, the Court of Appeal considered that the appropriate starting point for Mr Bublitz should have been no more than four years’ imprisonment on the basis that the Judge incorrectly took account of Mr Bublitz’s conduct in 2009 which was not found to be unlawful and he overstated the losses.8 The Court of Appeal, therefore, considered the starting point should be reduced by six months to account for this. Having acquitted Mr Bublitz on the prospectus charges, the uplift of nine months for this offending could also not now be applied.

[11]   Finally, the Court of Appeal considered that the discount allowed by the sentencing Judge for delay, effectively 19 months, was appropriate. However, the Court disagreed that it should be calculated as a percentage.

[12]   In allowing Mr Bublitz’s appeal against sentence, the Court of Appeal therefore adopted a starting point on the theft charges of four years’ imprisonment, from which 19 months were deducted for delay and a further five months (10 per cent) for personal mitigating factors the Judge took into account.   This yielded an end sentence of     24 months’ imprisonment, making home detention an option. The Court of Appeal considered such a sentence would be the least restrictive outcome. Taking into account the time served, the Court  considered  it  appropriate  to  substitute  a  sentence  of 11 months’ home detention for the sentence of three years and two months’ imprisonment imposed at first instance.

Claim by Mr Bublitz

[13]   Mr Bublitz seeks an award of 75 per cent of the costs incurred by him towards his defence, which, he says, are attributable to the 36 charges which were dismissed under s 147 of the CPA during trial or the eight charges (six by Toogood J and two by the Court of Appeal) on which he was acquitted following the final outcome of the second trial.

8      Appeal against conviction and sentence (CA), above n 5, at [159].

[14]   Mr Bublitz personally incurred costs of $1,527,283.49 towards his defence in the first trial before exhausting his resources and continuing on legal aid. He seeks 75 per cent of these costs, being $1,145,462.50, on the basis that those costs represent the approximate portion of costs spent by his defence team in the defence of the dismissed and acquitted charges.

The law

[15]Section 5 of the CCCA provides:

5        Costs of successful defendant

(1)Where any defendant is acquitted of an offence or where the charge is dismissed or withdrawn, whether upon the merits or otherwise, the court may, subject to any regulations made under this Act, order that he be paid such sum as it thinks just and reasonable towards the costs of his defence.

(2)Without limiting or affecting the court’s discretion under subsection (1), it is hereby declared that the court, in deciding whether to grant costs and the amount of any costs granted, shall have regard to all relevant circumstances and in particular (where appropriate) to—

(a)whether the prosecution acted in good faith in bringing and continuing the proceedings:

(b)whether at the commencement of the proceedings the prosecution had sufficient evidence to support the conviction of the defendant in the absence of contrary evidence:

(c)whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty:

(d)whether generally the investigation into the offence was conducted in a reasonable and proper manner:

(e)whether the evidence as a whole would support a finding of guilt but the charge was dismissed on a technical point:

(f)whether the charge was dismissed because the defendant established (either by the evidence of witnesses called by him or by the cross-examination of witnesses for the prosecution or otherwise) that he was not guilty:

(g)whether the behaviour of the defendant in relation to the acts or omissions on which the charge was based and to the investigation and proceedings was such that a sum should be paid towards the costs of his defence.

(3)There shall be no presumption for or against the granting of costs in any case.

(4)No defendant shall be granted costs under this section by reason only of the fact that he has been acquitted or that any charge has been dismissed or withdrawn.

(5)No defendant shall be refused costs under this section by reason only of the fact that the proceedings were properly brought and continued.

[16]   One of the events listed in s 5(1) must occur for the court to have jurisdiction to make an order under s 5. The defendant must either be acquitted or the charge must be dismissed or withdrawn.

[17]   The court has a broad discretion once s 5(1) is satisfied.9 Section 5(2) states, without limiting or affecting that discretion, the court “shall have regard to” all relevant circumstances in deciding whether to grant costs and the amount of any costs granted. That subsection includes a non-exhaustive list of circumstances the court should have regard to, where appropriate.

[18]Hardie Boys J addressed s 5 in R v Margaritis:10

The various criteria in s 5 really come down to two questions: was the prosecution reasonably and properly brought and pursued; did the accused bring the charge on his own head.

[19]In R v Connolly, Fogarty J quoted Hardie Boys J and said: 11

[7] As the argument developed in this hearing the truth of Hardie Boys J’s propositions in Margaritis came home. Nonetheless, I do not read any of these authorities to displace the plain words of s 5(2), which impose a duty on the Court to have regard to the considerations set out in those paragraphs where appropriate. The case law emphasises that it is important for the Court not to lose sight of the fact that it is subs (1) of s 5 which gives the Court the power to make an order and provides that this power is discretionary. Before the Court can make the order the Court must be satisfied that any order be just and reasonable. The criteria in subs (2) follow a logical sequence. Broadly they proceed chronologically. They are intended to provide a structure of analysis to be adapted by the Court to the particular circumstances of the particular case.

[20]   Fogarty J’s judgment was overturned by the Court of Appeal but later restored by the Supreme Court. The Supreme Court said:12

9      See Solicitor-General v Moore [2000] 1 NZLR 533 (CA) at [30]; and Delamere v Serious Fraud Office [2009] NZCA 142, [2009] 3 NZLR 94 at [27].

10     R v Margaritis HC Christchurch T66/88, 14 July 1989 at 8.

11     R v Connolly (2006) 22 NZTC 19,844 (HC).

12     R v Reid [2007] NZSC 90, [2008] 1 NZLR 575.

[21]    … In any event, Fogarty J applied the stipulated statutory criteria. What weight he may have given to any particular factor does not engage matters of principle affecting the validity of his statutory discretion.

…

[23] … But, in any event, an appellate court cannot hope to capture the ephemeral but significant impressions which inform the assessments and discretions of the trial judge. That is why, of course, a challenge to the exercise of discretion must demonstrate what would be termed, generally, an error of principle.

[21]   Section 5(3) makes it clear that there shall be no presumption for or against awarding costs in any case. Section 5(4) provides a defendant shall not be granted costs only because they have been acquitted or the charge against them has been dismissed or withdrawn. As Heath J said in McLeod v R:13

[10] ... Accordingly, while “success” in the proceeding is a jurisdictional pre-requisite to an application, the fact of “success” is neutral when the discretion whether or not to award costs (and, if so, in what amount) is exercised.

[22]   Section 5(5) provides that no defendant shall be refused costs only because the criminal proceedings were properly brought and continued.

Discussion

[23]   I agree with counsel for Mr Bublitz that many of the circumstances of this case do not fit neatly under any of the s 5(2) factors. In this context, the courts’ repeated emphasis on the wide discretion under s 5 is apt. I therefore do not intend to go through each of the s 5(2) factors in turn. Nor do I intend to closely analyse the various charges which were dismissed or upon which Mr Bublitz was acquitted. That is because I see the situation in rather simple terms.

[24]   Notwithstanding the detailed and comprehensive submissions made by counsel for Mr Bublitz, I conclude that Mr Bublitz’s application for costs under the CCCA should be dismissed for three major reasons. First, a costs award would “sit uncomfortably with [the] verdicts of guilty,”14 namely, the four theft convictions entered against Mr Bublitz. The offences of which he has been convicted are not minor

13     McLeod v R [2016] NZHC 221.

14     Smith v R [2013] NZCA 300 at [9].

or technical. They formed a substantial part of the Crown case. (Mr Bublitz can be taken to estimate 25 per cent, as he claims only 75 per cent of his costs). In none of the cases cited by counsel for Mr Bublitz was a defendant awarded costs under the CCCA, having been discharged or acquitted of only some of the charges they faced at trial (and convicted of others).

[25]   Secondly, no reparation was ordered or contemplated at sentencing because of Mr Bublitz’s impecuniosity. The funds stolen by Mr Bublitz totalled $1.17 million. He now seeks almost exactly the same amount, $1,145,462.50, for his costs, yet does not offer any reparation. In effect, he asks the Crown to pay twice — once for the payout made in terms of the Crown guarantee to investors in Mutual, who were out of pocket in respect of charges of which Mr Bublitz was convicted, and a second time to pay his own costs in respect of charges which were dismissed or on which he was acquitted.

[26]   Thirdly, Mr Bublitz’s costs have already been indirectly taken into account in the 19-month discount on  sentence  he  was  granted  by  the  Judge.  Counsel for Mr Bublitz argued that the discount was purely for delay, but I am of the view that it encompassed more.

[27]The Judge stated on sentencing:15

[90]  … You  have each suffered serious financial harm as a result of the  cost of defending yourselves, to the extent that that was not supported by the legal aid scheme. In your case, Mr Bublitz, I understand the loss to be something of the order of $1 million. You each recovered only a very small amount of your actual cost in the award of costs by Woolford J.

…

[93] I am satisfied that there has been a significant punitive element in the way in which this criminal prosecution has been undertaken, without ascribing blame or responsibility to anyone. I regard that as being appropriately recognised as a mitigating factor on sentence by reducing the appropriate sentences by 30 per cent from the starting points I have identified.

[28]   The punitive element to which the Judge referred includes the “serious financial harm” to which he had earlier referred.

15     Sentencing judgment (HC), above n 6.

[29]   Similarly, the Court of Appeal referred to the financial burden for Mr Bublitz when it upheld the discount of 19 months for delay. The Court of Appeal stated:16

[37] It is not disputed that the extraordinary delays have had profound consequences for the appellants and their families, affecting their health, reputations and financial position. The Judge allowed a discount of 30 per cent for this at sentencing.

…

[164] … The consequences of the delay for Mr Bublitz are the same in each of these examples. He spent nine months of his life and over $1 million of his own money in a High Court trial that had to be aborted due entirely to failings for which the Crown must take sole responsibility. He has suffered considerably in consequence of this. … The remedy  is for  the breach  of  Mr Bublitz’s right to be tried without undue delay and this has no necessary correlation to the starting point adopted at sentencing to reflect his culpability for the offending.

(emphasis added)

[30]   The Supreme Court also commented,17 in dismissing Mr Bublitz’s application for leave to appeal against the Court of Appeal decision18 dismissing his appeal from my earlier costs judgment:

Further, as the respondent submits, Mr Bublitz has had the benefit of a sentence reduction because of the delays and wasted costs due, albeit in part, to the failures of disclosure and the aborted initial trial.

[31]   In conclusion, if Mr Bublitz had been acquitted on all charges, he would have had a strong case for a substantial award of costs for all the reasons advanced by his counsel, but the Crown has  suffered  a  substantial  unrecovered  loss  caused  by  Mr Bublitz’s thefts. His application for costs under the CCA is dismissed. Likewise, the Crown’s application for costs under the CCCA is dismissed, as it was contingent on a successful application by Mr Bublitz.

Woolford J

16     Appeal against conviction and sentence (CA), above n 5.

17     Leave to appeal against earlier costs judgment (SC), above n 3 at [17].

18     Appeal against earlier costs judgment (CA), above n 2.