Coleman v Commissioner of Inland Revenue
[2021] NZHC 1324
•8 June 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2020-404-000007
[2021] NZHC 1324
BETWEEN PETER COLEMAN
Appellant
AND
THE COMMISSIONER OF INLAND REVENUE
Respondent
Hearing: 18 May 2021 Appearances:
M Jenkins for Appellant
S McMullan for Respondent
Judgment:
8 June 2021
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie On 8 June 2021 at 11.00 am
Registrar/Deputy Registrar Date:…………………………
Solicitors/counsel:
Meredith Connell, Auckland M E Jenkins, Pukekohe
COLEMAN v THE COMMISSIONER OF INLAND REVENUE [2021] NZHC 1324 [8 June 2021]
Introduction
[1] On 6 September 2019, Judge Dawson in the District Court at Auckland found the appellant, Peter Coleman, guilty of 42 tax related offences committed between 2011 and 2016.1
[2]The Judge found that Mr Coleman:
(a)charge 1 – used a forged document;2
(b)charges 2 – 34 – knowingly provided false information to the Inland Revenue Department (the IRD) with intent to obtain goods and services tax (GST) refunds for various companies in which he was involved, in circumstances where he knew they were not entitled to them;3
(c)charge 35 – evaded the assessment or payment of tax by a trust through which Mr Coleman’s home was held;4
(d)charges 36-41 – failed to provide information to the IRD (income tax returns), with intent to evade the assessment and payment of income tax;5 and
(e)charge 42 – dishonestly used a document.6
[3] On 25 November 2019, Judge Dawson sentenced Mr Coleman to four years and nine months’ imprisonment.7
1 Inland Revenue Department v Coleman [2019] NZDC 16685.
2 Crimes Act 1961, 257(1)(b). Maximum penalty 10 years’ imprisonment.
3 Tax Administration Act 1994, s 143B(1)(c) and (h). Maximum penalty five years’ imprisonment and/or a fine not exceeding $50,000.
4 Tax Administration Act 1994, s 143B(3) (as amended – Inland Revenue Department v Coleman, above n 1, at [87]-[88]).
5 Tax Administration Act 1994, s 143B(1)(b) and (f). Maximum penalty five years’ imprisonment and/or a fine not exceeding $50,000.
6 Crimes Act 1961, s 228(1)(b). Maximum penalty seven years’ imprisonment.
7 Inland Revenue Department v Coleman [2019] NZDC 23779.
[4] Mr Coleman appealed both his convictions and his sentence. He asserted that his trial counsel – Jeremy Bioletti –failed to competently discharge duties owed to him, that the Judge erred in his assessment of the evidence and made errors of fact and law and that the sentence imposed was inappropriate and/or manifestly excessive.
[5] This matter has passed through the hands of seven lawyers, all of whom have sought and been given leave to withdraw. However, helpfully, on 26 February 2021, the lawyers then acting for Mr Coleman filed a memorandum particularising the grounds of appeal. Further, Mr Coleman, while between lawyers, filed a voluminous affidavit together with two ring binders of documents, all of which were in existence and available at the time of the hearing in the District Court.
[6] By the time that the appeal came before me, Ms Jenkins was acting for Mr Coleman. She had only recently been assigned. She filed written submissions in advance of the hearing but they dealt only with the counsel competence issue. I sought to clarify the extent of the appeal with her. After discussing matters with Mr Coleman, Ms Jenkins confirmed that trial counsel competence remained in issue and that the alleged errors by the Judge, while not abandoned, were subsidiary to the counsel competence issue. The sentence appeal was abandoned.
Factual background
[7] Mr Coleman is an accountant. He also has some 25 years’ experience in managing companies. He has been a director of a number of companies and he has worked as an insolvency practitioner. He claims expertise in various aspects of the tax system.
[8] From mid-2014, Mr Coleman and various entities associated with him were investigated by the IRD. Mr Coleman provided only minimal information to investigators. He ultimately failed to respond to formal information requests or to co- operate with the investigation at all.
[9] A search under s 16 of the Tax Administration Act 1994 (the Act) of Mr Coleman’s residence was undertaken. Mr Coleman worked from that address. The search unearthed some 6,000 pages of documents relating to Mr Coleman’s tax affairs
and to the tax affairs of various entities he controlled. A compulsory enquiry under s 19 of the Act was carried out on 4 November 2015. Further information was also obtained from third parties, including banking records.
[10] Broadly, Mr Coleman managed a number of failing businesses. Those entities were Hagfish NZ Ltd, BJ Fishing Ltd, Kiwi Fishing Ltd, NZ Marine Seafoods Ltd (also known as Southern Hagfish Ltd) and SPH Fishing Ltd. The companies were all involved in fishing ventures. Mr Coleman also had a further company, Waka Management Holdings Ltd, which he claimed provided management services to the fishing companies in return for the payment of fees.
[11] Mr Coleman also controlled a trust – Hunua Holdings Trust. It owned Mr Coleman’s home.
[12] The charge of using a forged document (charge 1) arose out of a request that the IRD made to Mr Coleman for information to support a GST return filed by Hagfish NZ Ltd on 14 February 2014. The return showed nil sales but recorded expenses of
$189,926.82. Hagfish NZ Ltd sought a GST refund of $24,773.06. Mr Coleman provided a tax invoice from Nelson Slipway for repairs to a fishing vessel. During the search of Mr Coleman’s home, the IRD found various reprinted versions of the invoice. The principal investigator for the IRD, Angela Curtis, gave evidence that the reprinted versions of the invoice showed that multiple attempts had been made to match, line up, copy and paste into the invoice a higher GST inclusive figure than was actually charged. The principal issue at trial was whether the invoice said to support the GST refund claim was false, or as Mr Coleman put it, whether there was “a claim of right”.
[13] The 33 charges (charges 2-34) of knowingly providing false information to the IRD related to various GST refund claims made by the fishing companies. Mr Coleman had provided information to support their returns to the IRD. In part, the claims for GST refunds were based on management fees said to have been paid by the fishing companies to Waka Management Holdings Ltd. What was at issue was whether the information provided by Mr Coleman to the IRD to support the GST refund claims was false, incomplete or misleading. Mr Coleman also asserted the
companies were entitled to the GST refunds claimed given the definition of the words “taxable activity” in the relevant tax provisions.
[14] The charge (charge 35) of evading the assessment and payment of tax by a trust related to Mr Coleman’s home. The Hunua Holdings Trust owned the property. When it purchased the property in 2001, it sought and obtained a GST refund. Mr Coleman, when requested, provided a copy of the agreement for sale and purchase and a deed of lease recording that the property had been leased to another company controlled by Mr Coleman for use as a farm stay. However, the farm stay company did not trade; rather it was used to fund Mr Coleman’s personal expenses. Ultimately, it was struck off the Companies Register. The IRD determined there had been a change of use – i.e. that Mr Coleman was using the property as his personal residence – and that this had not been declared. This triggered a liability to return the GST refund to the IRD. It was not paid back. Ultimately, the property was sold by the mortgagee and it did not account for the GST refund either because it held a declaration from Mr Coleman asserting that the property was not used for a taxable activity. Mr Coleman had also written to the mortgagee’s solicitors asserting that the Trust had not claimed a GST refund. At trial, Mr Coleman denied that a GST input claim had ever been filed. It was his argument that he did not intend to evade the payment of the GST.
[15] The six charges (charges 36-41) of failing to provide information to the Commissioner related to Mr Coleman’s personal tax returns. It was the IRD’s case that Mr Coleman had failed to file tax returns for the tax years 2011 to 2016 (inclusive), that Mr Coleman was receiving significant self-employed income over those years and that he had failed to account for the same or to pay tax on that income. Mr Coleman challenged the assessments and denied that he intended to evade his tax obligations.
[16] The charge of falsely using a document (charge 42) related to a document known as an AR590. An AR590 is a formal financial declaration. Mr Coleman completed the form seeking relief from his tax obligations. The issue at trial was whether Mr Coleman dishonestly represented his financial position when he applied for financial relief.
[17] It was the IRD’s case that the offending overall was significant and that it had resulted in unpaid taxes of approximately $1.1 million.
[18] The IRD charged Mr Coleman in November 2016 and he was tried by Judge Dawson, sitting alone, between 29 July 2019 and 2 August 2019. On 6 September 2019, the Judge released his decision convicting Mr Coleman of each of the offences.
District Court decision
[19] The Judge outlined the charges, the facts and the relevant provisions in the Act and in the Crimes Act 1961. He recorded that the prosecution evidence was primarily given orally through the brief of evidence of Ms Curtis.
[20] The Judge then turned to each charge and identified the elements and the evidence relevant to those elements.
(a)He found that the evidence for the charge of using a forged document was “strong” and proved the charge beyond reasonable doubt.8
(b)On the charges of filing false GST returns, the Judge canvassed the evidence relating to the returns filed on behalf of each of Mr Coleman’s fishing companies. He found that the “extensive evidence” proved each of the 33 charges beyond reasonable doubt.9
(c)On the charge relating to Hunua Holdings Trust, the Judge held that Mr Coleman lacked credibility and that a strong inference could be drawn that he had intended to evade the payment of tax. He found the charge proved.10
(d)In relation to the charges relating to Mr Coleman’s personal income tax returns, the Judge found that the IRD had proved all necessary elements
8 Inland Revenue Department v Coleman [2019] NZDC 16685 at [23]-[36].
9 At [37]-[85].
10 At [86]-[103].
of the offences beyond reasonable doubt. He rejected Mr Coleman’s explanations.11
(e)In relation to the charge of dishonestly using a document, the Judge observed that some of the elements of the offence were not in dispute. On the disputed element, he preferred the evidence of the IRD over Mr Coleman’s explanations. Again, he found the charge proved.12
[21] The Judge commented overall that Mr Coleman’s “credibility and … reliability deteriorated the longer he gave evidence” and that Mr Coleman:13
… refused to accept undeniable facts and continued to revert to his own spin on what he says was the position which was not based upon reality. His version of events went well beyond mere muddlement and was factually and intellectually dishonest.
[22] The Judge convicted Mr Coleman on all charges, having regard to the “overwhelming evidence against him” and his “complete lack of credibility”.14
Sentencing
[23] Judge Dawson noted that Mr Coleman was 59 years old and that he has previous convictions, although they did not affect the sentencing. The Judge recorded that he had had regard to the submissions and the pre-sentence report and that he needed to impose a sentence that would hold Mr Coleman accountable for the harm done to the community; “for the money and property obtained from the public purse” and “for the money that ought to have been paid into the public purse”.15 He stated that Mr Coleman needed to take responsibility for his actions. He recorded that he had considered ordering reparation but that Mr Coleman was then bankrupt. He held that the sentence imposed needed to denounce Mr Coleman’s conduct.
[24] The Judge assessed Mr Coleman’s culpability and the gravity of his offending as high. He identified the aggravating features as being the extent of the loss to the
11 At [104]-[116].
12 At [117]-[126].
13 At [127].
14 At [130].
15 Inland Revenue Department v Coleman [2019] NZDC 23779 at [4].
Revenue caused by the offending and the abuse of trust in relation to the New Zealand tax system which relies on the honesty of taxpayers. He considered that there was a high level of premeditation to the offending and that Mr Coleman had used his knowledge of the tax system to offend over a span of five years. The Judge commented that the offending was wilful and deliberate.
[25] The Judge noted as a mitigating factor that Mr Coleman was an active and contributing member of his community. However, he noted that the pre-sentence report described Mr Coleman as someone unwilling to accept wrongdoing who was focused on remedying what he considered were inaccuracies.
[26] The Judge took the charge of using a forged document as the lead offence. He adopted a starting point sentence of three years’ imprisonment. He then applied an uplift of two years for all of the remaining charges. He deduced three months for Mr Coleman’s contribution to the community. The final sentence imposed was one of four years and nine months’ imprisonment on each charge, to be served concurrently.
The appeal
[27] The appeal against conviction is brought pursuant to s 229 of the Criminal Procedure Act 2011. Where an appellant appeals against conviction in a Judge-alone trial, he or she must show either that the Judge erred in his or her assessment of the evidence to such an extent that a miscarriage of justice has occurred (s 232(2)(b)), or that a miscarriage of justice has occurred for any reason (s 232(2)(c)). A miscarriage of justice means any error, irregularity or occurrence in or in relation to or affecting the trial that has created a real risk that the outcome of the trial was affected or has resulted in an unfair trial or a trial that was a nullity.16
[28] Ms Jenkins did not distinguish between the two grounds of appeal set out in s 232(2)(b) and (c).
(a)She primarily argued that a miscarriage of justice had occurred because of Mr Bioletti’s incompetence. This draws on s 232(2)(c). This
16 Section 232(4).
subsection is concerned with whether something material has gone wrong with the trial beyond the sufficiency of evidence.17 Central to the subsection is the concept of a miscarriage of justice. There is a two step process. First, the Court on appeal must determine that there has been an error, irregularity or occurrence in or in relation to or affecting the trial. Secondly, the error, irregularity or occurrence must have either created a real risk that the outcome of the trial was affected or resulted in an unfair trial or a trial that was a nullity.
(b)She did not abandon Mr Coleman’s heads of appeal asserting that the Judge erred in his assessment of the evidence and that a miscarriage of justice occurred. This raises s 232(2)(b). The correct approach to this ground of appeal was clarified by the Supreme Court in Sena v R.18 Such appeals proceed by way of rehearing. The appellate Court is required to form its own view of the facts and determine the appeal accordingly. If it comes to a different view than the trial Judge, the trial Judge will have erred and the appeal must be allowed. The appeal is not however approached de novo and it is for an appellant to show that an error has been made.
Submissions
[29] Ms Jenkins submitted that trial counsel failed to competently discharge his duties, arguing that he gave insufficient attention to the case and failed to prepare adequately for it. She submitted that the evidence established that Mr Bioletti failed to meet Mr Coleman before trial, failed to forward to him in a timely fashion the briefs of evidence disclosed by the IRD and the exhibits, failed to prepare a brief of evidence for him and failed to put the case for the defence to IRD witnesses. She submitted that Mr Bioletti’s “brief submissions” (as they were referred to by the Judge19) were insufficient considering the raft of charges against Mr Coleman. She also submitted that Mr Bioletti did not consult Mr Coleman about them despite Mr Coleman’s request that he should do so. She argued that, as a result, there was a miscarriage of justice.
17 Wiley v R [2016] NZCA 28, [2016] 3 NZLR 1 at [25]; Misa v R [2019] NZSC 134 at [45].
18 Sena v R [2019] NZSC 55.
19 Inland Revenue Department v Coleman, above n 1, at [48].
[30] Mr McMullan, for the IRD, submitted that there was no trial counsel error. He argued that Mr Bioletti competently discharged his duties and that it was Mr Coleman who failed to engage with Mr Bioletti in the preparation of his defence. He noted that Mr Coleman had earlier engaged another lawyer who was granted leave to withdraw from the case and that, since the appeal was filed, he has engaged seven further lawyers who have all withdrawn from the case. He submitted that there is a pattern. He argued in any event, there is no real risk that the outcome of the trial was affected by such errors as can be attributed to Mr Bioletti. He submitted that Judge Dawson’s findings were available on the evidence, noting that the IRD’s case was chiefly based on uncontested documents. He noted that Mr Coleman gave evidence over the course of some two days before the Judge, and put forward his explanation for what occurred. He submitted that it was open to the Judge to reject Mr Coleman’s evidence as being dishonest and unreliable.
Analysis
Trial counsel competence
[31] A defendant is entitled to a fair trial.20 A defendant also has a right to present a defence at trial.21 A key aspect of the right to a fair trial is the right to be represented by competent counsel who meets relevant standards and complies with relevant statutory, regulatory and common law obligations imposed on trial counsel.22
[32] The leading authority on the issue of trial counsel competence is the decision of the Supreme Court in Sungsuwan v R.23 The Court there emphasised the need for an appellate court, considering any appeal based on trial counsel competence, to retain its focus on the question of whether or not a miscarriage of justice has occurred, rather than focusing on whether there were shortcomings in counsel’s performance and how those shortcomings might be characterised. Gault J, delivering the majority judgment (for himself and for Keith & Blanchard JJ), noted as follows:
20 New Zealand Bill of Rights Act 1990, s 25(a).
21 Section 25(e).
22 Hall v R [2015] NZCA 403 at [3].
23 Sungsuwan v R [2005] NZSC 57, [2006] 1 NZLR 370; R v Scurrah CA159/06, 12 September 2016.
[70] In summary, while the ultimate question is whether justice has miscarried, consideration of whether there was in fact an error or irregularity on the part of counsel, and whether there is a real risk it affected the outcome, generally will be an appropriate approach. If the matter could not have affected the outcome any further scrutiny of counsel's conduct will be unnecessary. But whatever approach is taken, it must remain open for an appellate court to ensure justice where there is real concern for the safety of a verdict as a result of the conduct of counsel even though, in the circumstances at the time, that conduct may have met the objectively reasonable standard of competence.
Tipping J observed as follows:
[115] … when counsel's conduct is said to have given rise to a miscarriage of justice, the Court must ask itself first, whether something can fairly be said to have gone wrong with the process of justice in the way the appellant was represented at the trial. If that is so, the Court must then ask itself whether what has gone wrong has deprived the appellant of the reasonable possibility of a not guilty or more favourable verdict. If the answer is no, there will be no real risk of an unsafe verdict and thus no miscarriage of justice. If the answer is yes, there will have been a miscarriage of justice, irrespective of whether what has gone wrong amounts to negligence on counsel's part. …
[33] The Court of Appeal has observed that allegations of trial counsel error should be treated sceptically where an appellant has been convicted, as the appellant may seek to blame counsel for his or her situation rather than him or herself.24
The evidence
[34] In the present case, I heard evidence from both Mr Bioletti and Mr Coleman. Broadly, they were in agreement with what occurred.
[35] As already noted, Mr Coleman was charged in November 2016. His trial was scheduled for 3 September 2018. He was initially advised by another lawyer who sought leave to withdraw on 9 October 2017. Leave was granted. Mr Coleman then contacted Mr Bioletti. They spoke by phone in February 2018. An email exchange followed in the course of which Mr Bioletti’s proposed fees were discussed. Mr Coleman was unable to pay the fees requested and no retainer eventuated at this point.
24 R v Pointon [1985] 1 NZLR 109 (CA) at 114.
[36] Mr Coleman and Mr Bioletti spoke again by phone in August 2018. Mr Coleman had by this stage been adjudicated bankrupt and he was eligible for legal aid. Mr Bioletti was prepared to act for him and Mr Coleman completed the legal aid documentation and sent it, together with the IRD summons, the charging documents and detail of the charges, to Mr Bioletti on 23 August 2018. Mr Bioletti then asked Mr Coleman for the IRD summary of the alleged facts. The legal aid authorities granted funding for Mr Coleman to defend the charges, but at a low level. Mr Bioletti was not prepared to represent Mr Coleman at this level and he and Mr Coleman discussed reviewing the level of funding direct with legal aid services. In the event, the legal aid authorities approved a higher level of funding and Mr Bioletti then agreed to act for Mr Coleman. This occurred on 25 August 2018.
[37] On 28 August 2018, Mr Coleman emailed the various materials he had received from the IRD to Mr Bioletti. The materials provided included the email chain of correspondence between Mr Coleman, the IRD and the Court. Mr Coleman also hand delivered to Mr Bioletti’s chambers and, at Mr Bioletti’s request, a disc containing the disclosure which had then been provided by the IRD.
[38] Mr Bioletti did not make an arrangement to meet with Mr Coleman at this stage notwithstanding that the trial was then scheduled to commence on 3 September 2018. He said in cross-examination:
… these projects are long-term projects and there’s never any huge panic about them, plus it was obvious that I would need to get the … fixture adjourned on the basis that I needed time to deal with the case.
[39] Mr Coleman told me that he had not been able to read the materials on the disc provided to him by the IRD because he did not have the necessary software on his computer to enable him to do so. Mr Bioletti said that he read the materials on the disc and concluded that Mr Coleman would have to provide him with detailed instructions. There is however nothing to suggest that Mr Bioletti then sought detailed instructions from Mr Coleman. Rather, Mr Bioletti applied to adjourn the trial in the course of a telephone conference with the Judge on 29 August 2018. I do not know whether this was done on Mr Coleman’s instructions but nothing turns on this point.
It was common ground that the trial was tentatively adjourned to February 2019 and that Mr Bioletti sent a text message to Mr Coleman advising him of this.
[40] On 18 September 2018, the IRD sent an email to Mr Bioletti enclosing an updated and signed brief of evidence for the IRD investigator, Angela Curtis, and briefs of evidence for two other IRD witnesses, John Rowling and Angela Martin. The IRD also enclosed a notice under the Evidence Act 2006 which had been served in July 2017, an updated disclosure index and a further disclosure file comprising some 400 pages. Mr Bioletti did not promptly forward this material on to Mr Coleman.
[41] On 17 October 2018, Mr Bioletti sent another text to Mr Coleman telling him that the trial had been further adjourned to July 2019. Mr Bioletti said that he told Mr Coleman the new date – 29 July 2019 at 9.30 am. Mr Coleman said that Mr Bioletti simply told him that the trial had been adjourned to July 2019.
[42] Neither of the parties had retained the text message. The firm fixture date of 29 July 2019, commencing at 9.30 am, was not noted on the Court file until 19 October 2018 – two days after Mr Bioletti’s email to Mr Coleman. Mr Bioletti was not sure whether he had received an email from the Court advising of the new date prior to 19 October 2018. I suspect that Mr Coleman’s recollection is likely to be correct and that, on 17 October 2018, Mr Bioletti simply told Mr Coleman in the text that the trial had been adjourned to July 2019. In any event, it is common ground that Mr Coleman sent a text back to Mr Bioletti, confirming that he had received the text. It is also common ground that, apart from the text of 17 October 2018, Mr Bioletti did not provide Mr Coleman with any other advice about the date and time of the fixture.
[43] Mr Bioletti had overlooked forwarding a letter of engagement to Mr Coleman. The letter of engagement was eventually forwarded to Mr Coleman on 30 April 2019. It was signed by Mr Coleman and returned to Mr Bioletti on 21 May 2019.
[44] On 9 July 2019 – 20 days before trial – Mr Bioletti sent an email to Mr Coleman, saying that he had had no response to his email of 11 June 2019 in relation to the main prosecution brief from Ms Curtis. He asked when Mr Coleman’s response would be available. Mr Coleman responded on 10 July 2019 advising
Mr Bioletti that he had not received the email of 11 June 2019 and asking him to resend it.25 He said that he would then respond promptly. On 15 July 2019, Mr Bioletti sent a copy of Ms Curtis’s brief of evidence to Mr Coleman and he again requested a response. This was 14 days prior to the trial commencing. It was put to Mr Bioletti in cross-examination that asking for instructions on a comprehensive brief of evidence from the IRD’s main witness only two weeks before the trial was “too late”. Mr Bioletti’s response was “not necessarily”.
[45] Mr Bioletti was not sure whether he then sent the balance of the materials disclosed to him by the IRD on 18 September 2018 to Mr Coleman. There is no record that he did so.
[46] Mr Bioletti said that he had looked at the disc provided to him by Mr Coleman in August 2018. He also said that it was a complicated case with very many documents, running to very many pages. When I asked him how he was intending to defend the charges on Mr Coleman’s behalf when he had not met him and had not found out what his version of events was, Mr Bioletti’s answer was:
Because he could provide me by email his position. I needed some raw material … from his point of view.
When I asked Mr Bioletti whether it had occurred to him that he should have actively sought out Mr Coleman, he replied:
I probably should have but he’s a professional accountant which may have affected the way I dealt with him.
[47] Mr Coleman read the brief sent to him on 15 July 2019 and prepared some notes in relation to it. He did not however contact Mr Bioletti. He said that he did not appreciate that the trial was fast approaching and that he did not consider there was any great urgency to the task.
[48] The trial was called at 9.30 am on Monday 29 July 2019. Mr Bioletti was present; Mr Coleman was not. The matter was stood down. Mr Bioletti sent
25 Mr Bioletti gave evidence as follows: “I think what happened was that I tried to send [the 11 June 2019 email] to him but I may not have attached it from memory”.
Mr Coleman a text message at 9.33 am telling him that his trial was proceeding in courtroom 16. Mr Coleman called Mr Bioletti and Mr Bioletti told Mr Coleman that he had to attend Court immediately. Mr Coleman arrived in Court at approximately
10.25 am. Mr Bioletti met him at the door of the Court. This was the first time that Mr Coleman and Mr Bioletti had met.
[49] At some stage one of the charges was amended. It is unclear whether Mr Coleman was in Court when this occurred. There is nothing to suggest that Mr Bioletti discussed this issue with Mr Coleman.
[50] The Judge gave Mr Bioletti some 20 minutes to discuss matters with Mr Coleman. Mr Bioletti told Mr Coleman that that the Judge had made it clear that he was not prepared to adjourn the trial. During the course of their discussions, Mr Coleman was presented with a document by Mr Bioletti which he was asked to sign. The document recorded that Mr Coleman had not provided any instructions to Mr Bioletti. Mr Coleman signed the document; he told me that he signed it because it was true. In cross-examination, Mr Bioletti accepted that he was not ready to proceed with the trial and that it would have been much better if he had had input from Mr Coleman. Nevertheless, Mr Bioletti did not apply for an adjournment. Nor did he seek leave to withdraw. The trial commenced at approximately 10.45 am. The IRD opened its case and then called its first witness, Ms Curtis. Her brief of evidence was 115 pages long and it was accompanied by six comprehensive schedules. Mr Bioletti proceeded to cross-examine Ms Curtis at the end of her evidence-in-chief, albeit relatively briefly.
[51] On the evening of 29 July 2019, Mr Bioletti sent additional IRD briefs of evidence to Mr Coleman. He had received those briefs from the IRD on 26 July 2019.
[52] In cross-examination, Mr Bioletti accepted that he had not discussed various aspects of the IRD’s case with Mr Coleman. Mr Bioletti said:
… not having had instructions from him prior to the trial meant that the whole situation was washed up in terms of time for any individual issue.
He went on to explain this answer as follows:
What I am saying is that because there were no instructions before the trial, it made it difficult to focus on the number of issues during the trial. So I’m trying to do my own analysis and work within the trial actually happening.
Mr Bioletti accepted that he did not cross-examine IRD witnesses in relation to some of the issues and one of the charges.
[53] The trial was scheduled for seven days. It took five days. The Court sat for half a day only on the Tuesday and started late on the Wednesday. However, Mr Bioletti did not sit down with Mr Coleman on either the Tuesday afternoon or the Wednesday morning to discuss the case with him. Nor did Mr Bioletti prepare Mr Coleman for giving evidence, although he did advise Mr Coleman that he should give evidence. Mr Coleman did so over the course of some two days.
[54] The Judge asked for written submissions at the end of the trial. The IRD through its counsel filed comprehensive written submissions. Mr Bioletti’s submissions ran only to a “couple of pages”. He did not consult Mr Coleman over their preparation. It was Mr Coleman’s evidence that, at the conclusion of the trial, he specifically asked Mr Bioletti about the preparation of closing submissions and asked to review them before they were filed. He said that Mr Bioletti told him he would contact him once he had received the IRD submissions. Mr Bioletti did not do so. Mr Coleman followed the matter up with Mr Bioletti. Mr Coleman was told by Mr Bioletti that he had filed the submissions and that it was all straightforward. He said that when he asked Mr Bioletti what the IRD had filed, Mr Bioletti responded, “the usual stuff”.26
Conclusion – counsel competence
[55] On the evidence, I have no hesitation in concluding that Mr Bioletti’s conduct of the defence was well below the standard expected of trial counsel and that he breached various obligations that he owed to Mr Coleman. Mr Bioletti failed to properly consult with Mr Coleman prior to trial. While Mr Coleman provided the disclosure disc he had received from the IRD to Mr Bioletti, there is nothing to suggest
26 These allegations were not put to Mr Bioletti, who gave his evidence first. I indicated to counsel that I was prepared to consider an application for Mr Bioletti to be recalled but counsel did not make such an application.
that Mr Bioletti ever asked Mr Coleman whether or not he had read the materials on the disc. Mr Bioletti did not go through the IRD’s evidence and disclosure in advance with Mr Coleman. Mr Bioletti did not obtain in advance Mr Coleman’s instructions on any aspect of the matter. This was in breach of the Conduct and Client Care Rules put in place by the New Zealand Law Society.27 There is no prescribed standard for obtaining instructions.28 Nevertheless, in the relatively complicated circumstances of this case, Mr Bioletti’s preparation for the trial was plainly inadequate. Mr Bioletti had no effective instructions at all. He belatedly asked Mr Coleman for his comments on the evidence from the IRD’s principal investigator, but when those comments were not forthcoming, he did not chase Mr Coleman up. Indeed, Mr Bioletti did not meet with Mr Coleman until the trial was underway. Further, he did not make other IRD briefs available to Mr Coleman until after the trial had commenced and he failed to prepare a brief of evidence for Mr Coleman, but nevertheless advised him to give evidence at the trial.
[56] Mr Coleman is not blameless in what occurred. Even on his own evidence, he knew that the trial was scheduled for some time in July 2019. He took no steps to try and pre-empt Mr Bioletti into action. His response to perusing Ms Curtis’s brief of evidence, when it was belatedly provided in mid-July 2019, was at best casual – at worst dismissive. He took no steps to try and protect his own position or to ensure that Mr Bioletti was properly briefed.
A miscarriage of justice?
[57] The more difficult question is whether or not Mr Bioletti’s incompetence has caused a miscarriage of justice and whether there is a real risk that the outcome of the trial was affected.
[58] As I have noted, there were 42 charges. Some were stand-alone charges while others fell into groups. Charge 1 stood alone; charges 2-34 fell into a group; charge 35 stood alone; charges 36-41 were another group; charge 42 also stood alone. I have considered each charge or group of charges. Before doing so, I record that I agree
27 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.3.
28 Morris v R [2014] NZCA 383 at [47].
with the conclusion reached by Mr Bioletti that Mr Coleman had to give evidence. Given the charges and the IRD’s case, and given that the IRD’s case was in very large part based on documents seized from Mr Coleman’s office during the search, he had no alternative but to do so. Accordingly, I have taken the evidence given by Mr Coleman at trial into account.
[59] The first charge alleged that Mr Coleman used a forged document. I have set out the background to this charge above at [12]. It was the IRD’s case that, when it asked Mr Coleman to provide information to support Hagfish NZ Ltd’s GST return and in particular the refund claimed, Mr Coleman supplied a Nelson Slipway tax invoice totalling $76,095.50. Ms Curtis said in evidence that she spoke to the managing director of Nelson Slipway and that he had advised that the company’s invoice had been for $57,680.34.
[60]Nelson Slipway had originally proposed invoicing Hagfish NZ Ltd for
$76,095.50 but, after negotiations with Mr Coleman, the invoice had been reduced to
$57,680.34. When Mr Coleman’s home was searched, various reprinted versions of the Nelson Slipway invoice were discovered. It was Ms Curtis’s evidence that various copies of the invoice showed that multiple attempts had been made to match, line up, copy and paste into the invoice the higher GST inclusive figure of $76,095.50. The effect of this change was to raise the GST inclusive value of the tax invoice from
$57,680.34 to $76,095.50, and thus to increase the refund claim.
[61]It was Mr Coleman’s argument that, while the original invoice seeking
$76,095.50 from Nelson Slipway has been discounted to $57,680.34, this discount was subject to a condition which had not been met. Therefore, he argued Hagfish NZ Ltd remained liable to Nelson Slipway for the full amount. At trial, he claimed that he had lost the original invoice and that he had therefore created “a buyer’s invoice”. He accepted that he had overclaimed but said that he had amended the claim in a subsequent Hagfish NZ GST return. The IRD said that no amended return had been filed.
[62] Mr Bioletti, in his affidavit filed in respect of the appeal, asserted that the defence was communicated to him by Mr Coleman and that he advanced
Mr Coleman’s explanation in his defence at the trial. He was not challenged on this assertion in cross-examination.
[63] I have checked the transcript of the evidence given at the trial. Mr Bioletti did not cross-examine Ms Curtis about the IRD’s allegations. However, Mr Rowling, the managing director of Nelson Slipway, was also called by the IRD. He was cross- examined by Mr Bioletti and Mr Coleman’s version of events was put to him. It was the Mr Rowling’s evidence that the only document that Nelson Slipway created referring to the higher figure was a “job cost report” and that this amount was subsequently negotiated down to the lower figure which was contained in the invoice.
[64] Mr Bioletti also called Mr Coleman and Mr Coleman advanced his defence in relation to the issue. He asserted that it was appropriate for him to generate a “buyer created” invoice for the higher figure. Mr Coleman was in turn cross-examined by the IRD’s lawyer as to his assertions.
[65] I am satisfied that Mr Coleman’s version of events was fully advanced before the Judge. The Judge made various factual findings in relation to the charge. He rejected Mr Coleman’s evidence and accepted the evidence of Mr Rowling and Ms Curtis. Mr Coleman in his affidavit filed in support of the appeal has not pointed to any error in the Judge’s analysis. Nor is there anything in the memorandum of 26 February 2021 detailing the grounds of appeal which demonstrate to me that the Judge erred. I am not persuaded that a miscarriage of justice has occurred in relation to charge 1 or that there is a real risk that the outcome of the trial in relation to this charge was affected.
[66] I now turn to the 33 charges which alleged that Mr Coleman knowingly provided false information to the IRD with intent to obtain GST refunds, in circumstances where he knew that the companies on whose behalf the refunds were being sought were not entitled to them.
[67] At trial, the primary issue was whether the expenses claimed in each return were false. Mr Coleman on appeal asserted that the Judge erred when he found that:
(a)the expenses were false; and
(b)various fishing companies did not undertake any taxable activity.
[68] Many but not all of the refunds sought relied on management fees said to have been charged to the fishing companies by Waka Management Holdings Ltd, one of Mr Coleman’s entities. Mr Bioletti did cross-examine Ms Curtis about the Waka Management fees, albeit relatively briefly. He did not cross-examine her about any of the other invoices relied on. Mr Coleman now says that there was documentation available to support the refunds sought in the GST returns. He asserts in the memorandum of 26 February 2021 that this documentation would have been put before the Court if Mr Bioletti had prepared properly for the trial. Copies of the documentation said to support the invoices are annexed to his affidavit. Mr Bioletti says that Mr Coleman did not make these documents available to him and that, as a result, he did not advance these matters in Mr Coleman’s defence. Mr Bioletti says that this was due to the “lack of instructions” he received from Mr Coleman prior to trial.
[69] As to whether or not the fishing companies were undertaking a taxable activity, Mr Coleman said that there were various export sales invoices and other documents showing that the fishing companies – or at least some of them – were undertaking taxable activities. Mr Bioletti said that Mr Coleman did not give him instructions in relation to this issue prior to trial.
[70] Mr Coleman also claims that he was not given copies of some of the exhibits relied on by the IRD to review prior to trial. Mr Bioletti’s answer is that Mr Coleman had the disclosure prior to it being given to him. With respect to Mr Bioletti, his assertion assumes that Mr Coleman was able to look at the disclosure. As I have noted above, it was Mr Coleman’s evidence that he could not read the electronic disclosure because he did not have the appropriate software on his computer. There is nothing to suggest that Mr Bioletti checked whether or not Mr Coleman had read the IRD disclosure. He did not discuss it at all with Mr Coleman prior to trial.
[71] In these circumstances, I am concerned that there could have been a miscarriage of justice as a result of Mr Bioletti’s incompetence. Mr Coleman’s defence to charges 2 – 34 does not seem to have been put, certainly not adequately, to the Judge, perhaps because Mr Bioletti did not fully appreciate what the defence was. The IRD’s principal investigator was not cross-examined on many of the underlying invoices. While Mr Coleman gave evidence, he did so largely without reference to the documentation (perhaps because he had not seen it). Further, a number of the questions asked by Mr Bioletti in Mr Coleman’s evidence-in-chief were cursory. With some of the charges, Mr Coleman was simply referred to the relevant GST return and asked whether it was an accurate record of expenses and sales for the period. Other charges were put globally to Mr Coleman. For example, one of the questions asked by Mr Bioletti was as follows:
Now charges 28, 29, 30, 31, 32, 33, 34 all related to GST returns for SPH Fishing Ltd. Are those returns accurate?
A: Well I – they’re accurately filed. They’re prepared and filed as I said
…
There was some very limited follow up discussion in relation to charge 30 but nothing in relation to the other charges. Other charges – for example, charges 18 and 19 – were not mentioned at all.
[72] In my view, there is a real risk that the outcome of the trial was affected by Mr Bioletti’s failure to put the IRD to proof, by his failure to brief Mr Coleman and obtain instructions from him, and by his resulting failure to put the defence through Mr Coleman in the course of his evidence-in-chief. Accordingly, I set aside the convictions in respect of charges 2 to 34 (inclusive) relating to the GST refunds and I vacate the sentences imposed in respect of these charges.
[73] I now turn to charge 35 – the Hunua Road GST charge. The IRD asserted that Mr Coleman evaded the refund of GST which he knew was payable on the forced sale of his residential property. Ms Curtis gave evidence that the mortgagee of the property did not return GST on the sale first, because it held a declaration from Mr Coleman stating that Hunua Holdings Trust had not filed a GST return because it did not undertake any taxable activity and secondly, because its solicitors had received written
advice from Mr Coleman in 2015 asserting that a GST refund had never been claimed on the property. The IRD said in evidence through Ms Curtis that Hunua Holdings Trust was registered for GST, that it had filed a GST return in November 2001 and that it received a refund of GST of $36,510.97 because it asserted that the property was going to be used for a taxable activity. Mr Coleman provided documents to support the claimed refund. GST was required to be returned on the sale of the property because the use of the property had changed in the interim, and it was instead being used by Mr Coleman as his personal residence.
[74] At trial, the only question put by Mr Bioletti to Ms Curtis in relation to Hunua Holdings Trust in cross-examination was to seek confirmation that the Trust had been deregistered for GST purposes. When Mr Coleman gave his evidence-in-chief, Mr Bioletti did ask him about the Trust. Mr Coleman accepted that, in 2001, an input claim was made when the Trust purchased the property and that it had received a GST refund from the IRD of $36,510.97. He also accepted that the Trust should have been deregistered for GST purposes in 2014, and that this would have required a “private use adjustment” given that a GST refund had been received when the property was purchased. He also accepted that the GST refund should have been returned to the IRD by the Trust. When he was cross-examined by counsel for the IRD, he was referred to the letter which he had sent to the mortgagee in 2015. He accepted that he had prepared the letter and that it asserted that Hunua Holdings Trust had not claimed a GST input tax credit on the purchase of the property. He attempted to explain the letter away. He denied any intent to evade payment of the GST refund.
[75] In my view, the position in relation to this charge was straightforward. Mr Coleman in his affidavit takes the issue no further – he asserts that the letter to the mortgagee’s solicitors was correct but there is nothing to support the assertion and it is directly contrary to the IRD’s position and the documentation provided by it. In the memorandum of 26 February 2021, it is alleged that the Judge was wrong to find “evasive intent”. The Judge was clearly entitled to reject Mr Coleman’s version of events. No error by the Judge has been made out. There has been no miscarriage of justice in relation to this charge.
[76] I now turn to charges 36 – 41, all of which relate to Mr Coleman’s personal income tax liability.
[77] It was the IRD’s case that Mr Coleman had not filed income tax returns since the end of the tax year ending 31 March 2011. Mr Coleman accepted at trial that he was required to file returns and that he had not done so. He said that the reason he had not done so was because his personal tax affairs were caught up with the tax affairs of the various companies he owned and controlled and that he had simply not got “to the point” of being able to take care of his own personal tax situation. He accepted that he was self-employed from March 2011 onwards.
[78] The IRD asked the Judge to infer that Mr Coleman intended to evade the assessment of tax payable by him personally. The Judge accepted that this was the inference which should be drawn, noting Mr Coleman’s knowledge and experience of tax related matters. The Judge commented that Mr Coleman “deliberately did not file tax returns for a long period of time”.29
[79] In his affidavit, Mr Coleman asserts that the IRD relied solely on the outstanding returns and on the fact that no payments were made by him after default income tax assessments were issued. He claimed that he did not know that the default assessments had been issued.
[80] The Judge considered relevant law and found on the facts that Mr Coleman had intended to evade the assessment of payment of tax. He noted the long period of unfiled returns – 2011 to 2015 – the lack of a credible explanation for the failure by Mr Coleman and the fact that Mr Coleman had made no attempts to pay any of the tax once default assessments issued, despite requests by the IRD for payment, albeit collection proceedings in the District Court and eventually bankruptcy proceedings. There is nothing in Mr Coleman’s affidavit or in the 26 February 2021 memorandum which persuades me that the Judge erred in his finding.
29 Inland Revenue Department v Coleman, above n 1, at [114].
[81] Mr Coleman also disagreed with the IRD’s assessment of his tax liability. That however is not a defence to the charges. Such charges do not require proof of the amount of tax evaded.30
[82] I am satisfied that Mr Coleman’s explanations were before the Judge and that the Judge was entitled to dismiss them. No error by the Judge has been made out. There is no possibility of a miscarriage of justice in relation to this charge.
[83] The final charge – charge 42 – related to Mr Coleman’s provision of a AR590 form. An AR590 form is used when a person declares his or her financial position to the Revenue. It is required where a person is seeking relief from tax arrears.
[84] The only issues at trial were whether the document which Mr Coleman supplied to the IRD was an honest representation of his financial position, and if it was not, whether Mr Coleman knew that it was inaccurate.
[85] The IRD, through Ms Curtis, said that Mr Coleman declared in the AR590 form that he had earned $6,000 (net) per month, or $94,000 before tax per year. He also declared that he could not repay his tax debt to the IRD. The IRD asserted that the form was inaccurate because the evidence disclosed that Mr Coleman earnt other income, and/or used other accounts to fund personal expenses. By way of example, the IRD said that the AR590 omitted reference to Waka Management Holdings Ltd’s bank accounts, which Mr Coleman used to make personal purchases for his own benefit.
[86] All of the assertions/explanations now advanced by Mr Coleman in his affidavit were given by him at trial. He was cross-examined extensively in relation to them. His explanations were before the Judge and they were rejected by him. There is force in the IRD’s submission before me that the answers Mr Coleman gave when he was cross-examined by IRD’s counsel at trial showed a degree of evasion. Again, I am not persuaded that the Judge erred or that there has been any miscarriage of justice in regard to this charge.
30 Smith v R [2008] NZSC 110 (2009) 24 NZTC 23,176 at [2].
Result
[87] For the reasons I have set out, I allow the appeal and set aside the verdicts, the convictions entered and the sentences imposed in relation to charges 2 – 34 (inclusive). The convictions entered on all other charges stand and the appeal is dismissed in relation to those charges.
[88] Mr Coleman was sentenced by the Judge to four years and nine months’ imprisonment on each charge, with the terms of imprisonment to be served concurrently. The sentence appeal was abandoned. It follows that there is no alteration required to the sentence that Mr Coleman is currently serving.
[89] Charges 2 – 34 (inclusive) are remitted to the District Court at Auckland for retrial.
Wylie J
5
0