D v District Court at Wellington HC Wellington CIV 2005-485-1426

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D v District Court at Wellington

High Court Wellington CIV 2005-485-1426
5, 19 April 2006
Ronald Young J

Criminal law – Offences – Using document to defraud – Whether contract a

“valuable security” – Whether expense claim forms used to obtain pecuniary advantage – Crimes Act 1961, ss 229A, 246(1) and 347 – Crimes Act 1908, s 265 – Theft Act 1986 (UK), s 22.

The Department of Internal Affairs issued licences to charitable trusts or societies to operate gaming machines under the Gaming and Lotteries Act

1977. The New Zealand Community Trust held licences for more than 200 sites around New Zealand to operate such machines. By the end of November 1999 the D Group, of which the plaintiffs were two of the owners, had 13 sites at which gaming machines were run by the New Zealand Community Trust. Mr Robert Holden, who was a principal of Associated Gaming Services,

25negotiated, on behalf of the New Zealand Community Trust, some of its arrangements with site holders.
The Community Grants Foundation (CGF) was another licensed society operating gaming machine sites in New Zealand. It was one of the New Zealand Community Trust’s competitors. The Crown case was that in

December 1999 RD approached Mr Holden and said that the D group had received an offer from CGF to take over the sites operated by the New Zealand Community Trust. It was alleged that the offer was fictitious. After receiving this advice, Mr Holden contacted the New Zealand Community Trust and advised them of the vulnerability of their sites at the D premises because of the
CGF offer. The trustees of the New Zealand Community Trust then believed they had to match or better CGF’s offer and so they put together a proposal for the Ds. The proposal was accepted, and the Ds and the New Zealand Community Trust signed a written agreement for a period of two years (the December contract). The contract increased site reimbursement, provided for
payments in advance to the Ds and agreed to an administration fee, per machine, per month.
The District Court refused to discharge either plaintiff of the charges against them, and they sought judicial review of that decision. They said that the Court erred in refusing the discharges because the December contract was
not a valuable security, and that there was no evidence that there was false pretence or representation because the Crown could not establish that no offer had been made to the Ds by CGF.

Held: 1 The December contract was not a valuable security within the meaning of the first part of the definition in s 246(1) of the Crimes Act 1961 as it did not

create an unconditional entitlement to the money specified in the contract, but rather a conditional entitlement dependent upon the services being performed (see para [40]).

419

High Court

[2007]

2 The December contract did come within the second part of s 246(1) in that there was evidence to establish that the accused, with intent to defraud by false pretence, induced the New Zealand Community Trust to write or affix its name to the contract in order that it might afterwards be made or converted into

or used or dealt with as a valuable security. There was therefore evidence to 5 justify a charge under the second part of s 246(1) (see para [41]).

Result: Application dismissed.

Cases mentioned in judgment

R v Cattermole [1997] DCR 210.

R v King [1992] QB 20; [1991] 3 All ER 705. 10

R v Webster [1944] NZLR 882.

Application

This was an application by RD and SD for judicial review of the decision of the first defendant, the District Court at Wellington, to refuse to discharge either plaintiff on a charge of false pretences under s 246(1) of the Crimes Act 1961, 15 and SD on 11 charges of using a document with intent to defraud for the purpose of obtaining pecuniary advantage under s 229A of the Act.

D L Stevens QC for the accused.
G Burston for the Crown.

Cur adv vult 20

RONALD YOUNG J. [1] The plaintiffs seek judicial review of Judge Behrens’ decision pursuant to s 347 of the Crimes Act 1961 to refuse to discharge either plaintiff on one charge of false pretences (s 246(1) of the Crimes Act) and SD on 11 charges of using a document with intent to defraud

for the purpose of obtaining pecuniary advantage (s 229A of the Crimes Act). 25

The plaintiffs allege two errors of law by the Judge with respect to the false pretence charge. They say that there was no evidence from which the Court could conclude that the plaintiffs represented the existence of a fictitious offer and, secondly, that the letter of 16 December 1999 alleged to be a

valuable security under s 246 was not, as a matter of law, capable of being a 30 valuable security.

With regard to the charges under s 229A of the Crimes Act, at the date the crime was alleged (June 1999) the plaintiff SD submits any pecuniary advantage had already been obtained and thus it could not be said that the documents used were capable of being used to obtain a pecuniary advantage. 35

Background

The background to this case relates to the operation of gaming machines in licensed premises (sites). The Department of Internal Affairs issues licences to charitable societies or trusts to operate gaming machines under the Gaming

and Lotteries Act 1977. Money generated from gaming machines is forwarded 40 from the site to the society or trust that operates the machines. That society or

trust is then responsible for the distribution of funds. The distribution of funds is one-third to the government as taxes; a minimum of one-third returned to the community by way of grants; and up to a maximum of a third for expenses in running the gaming operation, with any moneys left over from that third also 45 going to the community by way of grants.

The trust, from the expenses incurred in running the gaming operation, can pay itself administration costs. In addition it will need to pay the cost of

servicing the machines and, as part of the running costs, reimbursement to the owner of the licensed premises in which the machines are situated for the actual and reasonable expenses involved in permitting the gaming machines to be on their premises.

[6] The New Zealand Community Trust holds licences in over 200 sites in which gaming machines operate. By the end of November 1999 the D Group, of whom the two accused, RD and SD, are part-owners, had a total of 13 sites around New Zealand where gaming machines were run by the New Zealand Community Trust. The Community Grants Foundation (CGF) was another
licensed society operating gaming machine sites in New Zealand. It was a competitor of the New Zealand Community Trust. Mr Robert Holden, who was a principal of Associated Gaming Services, negotiated, on behalf of the New Zealand Community Trust, some of its arrangements with site holders. [7] The Crown case was that in December 1999 the accused RD approached
Mr Holden and said the D Group had received an offer from CGF to take over the sites operated by the New Zealand Community Trust. He alleged that the offer consisted of increased site reimbursement amounts, paying such reimbursement in advance and paying an administration fee for overseeing their sites. The latter fee was to be paid on a per machine, per month basis. The
Crown case was that this offer was completely fictitious.
[8] Mr Holden (who did not know that the offer was fictitious), after receiving advice of the offer from Mr D, contacted the New Zealand Community Trust and advised them of the vulnerability of their sites at the D premises because of the offer from CGF. The trustees of the New Zealand
Community Trust believed that they had to match or better the CGF’s offer and so they put together a proposal for the Ds. This proposal was accepted by the Ds and on 16 December 1999 the Ds and the New Zealand Community Trust signed a written agreement. The agreement was to commence on 1 January
2000 and would be for a period of two years. The contract increased site
reimbursement for some of the D sites, agreed to provide payments in advance and agreed to pay the Ds an administration fee, per machine, per month.

Section 246 charge
[9] The plaintiffs were charged contrary to s 246(1) of the Crimes Act
(before the 2003 Crimes Act amendment) that with intent to defraud they:

(a) “by false pretence” induced the New Zealand Community Trust to make a valuable security. The false pretence alleged was the claim that an offer had been made by CGF, on particular terms, to take over the gaming machines in the Ds’ licensed outlets; and
(b) that this false pretence caused or induced the New Zealand
Community Trust to enter into a valuable security, namely the agreement of 16 December 1999 providing for increased earlier payments to the Ds and for the administration fee.

Plaintiffs’ case
[10] The plaintiffs submit that the District Court Judge erred in refusing to

discharge the plaintiffs because there was no evidence:

(a) that there was false pretence (here a false representation) because the Crown could not establish that no offer had been made to the Ds by CGF; and

(b) that the contract of 16 December 1999 was not a valuable security.

No offer

[11] The plaintiffs say the Judge erred when he concluded that there was evidence that the Ds represented to the New Zealand Community Trust that they had received an offer from CGF. The plaintiffs say there was no such evidence and they say in any event there was no evidence that the offer was 5 fictitious.

As to this the Judge said at para [11]:

“[11] Having considered the evidence and submissions I am not prepared to discharge the accused on the basis of the state of the evidence. The factual argument is whether there was an offer or not. The Crown must in 10 the end prove there was not. The state of the evidence is that there could
have been at least an informal offer. Given the state of the evidence, the existence of an offer is a question for the jury.”

I agree with the Judge there is evidence that no offer was made. Without detailing all such evidence and acknowledging there is no need for this purpose 15 to identify evidence which might conflict with this evidence, there is the following relevant evidence:

(a) Dean Winter was the Senior Investigator for the Department of Internal Affairs. In his deposition evidence he recorded Mr RD saying: 20
“He advised me that the Community Grants Committee did not
come to the [D] Group with an offer.”

(b) Mr McPhee was the agent for CGF and would have been the person who, if an offer had been made, would have made the offer. Having
read his evidence, while it is clear there were discussions with the Ds 25 about a takeover of the New Zealand Community Trust’s business, it
was difficult to see that any offer was actually made by CGF. This was confirmed by the evidence of Mr Roger Smail, the Chief Executive Officer of CGF, who said Mr McPhee would not have had the authority to make such an offer to the Ds without CGF board approval. 30
No board approval had been obtained.

The plaintiffs’ case was also that there was no evidence of a representation by them to the New Zealand Community Trust that they had received an offer from CGF. The relevant evidence is from Mr Robert Holden.

He was the chief executive of the agency that acted for the New Zealand 35

Community Trust. He spoke directly with the Ds. His evidence at depositions

was rather vague and at times equivocal. However, he sent an email and a following memorandum to the New Zealand Community Trust immediately after the meeting with the Ds in 1999. The email and the memorandum made

it clear that he considered the Ds had told him that they had an offer from 40

McPhee on behalf of CGF for all of the New Zealand Community Trust sites

with the Ds. The witness, Mr Holden, acknowledged the email and subsequent memorandum were his.

Mr Holden in his evidence at depositions made it clear he was struggling to recall the details of the meeting, then some five years later. 45

However, in my view, in his evidence he sufficiently indicated that the contents

of the email and the memorandum were an accurate summary of what had been discussed with the Ds.

[16] Counsel for the plaintiffs submitted that Mr Holden’s email and memorandum were based on “assumptions that offers had been made by the Ds”. However, as the witness Mr Holden said, these “assumptions were based on the discussion we had with RD”.

[17] In any event, in exercising his discretion under s 347 of the Crimes Act a Judge can properly consider what further evidence may be given by the Crown at trial (see s 347(1)(c)). Here the witness, Mr Holden, has not yet been explicitly asked whether each part in the email of 1 December 1999 and the subsequent memorandum accurately reflects what he was told by Mr D.
Without adoption by the witness the statement may not be able to be used by the Crown. However, the Crown must have the chance to have the witness confirm or reject the accuracy of what is, on the face of it, an essentially contemporaneous summary of Mr Holden’s conversation with RD.
[18] In those circumstances I do not consider the Judge was in error in his
conclusion that the issue is properly left for the trial Judge. At trial the evidence in support of the alleged misrepresentation can be considered by the Judge after the Crown has had the opportunity to establish the accuracy of Mr Holden’s email and memorandum. I therefore see no basis to justify the plaintiff’s claim here.

Valuable security
[19] The plaintiffs submit the Judge made an error of law in concluding the
contract of 16 December 1999 was a valuable security pursuant to s 246(1) of the Crimes Act. I set out in full the agreement of 16 December 1999:

“COMMUNITY

16 December 1999
Mr R & SD The D Group
C/- The Ox Bar
Cuba St
WELLINGTON
Dear R & S
RE: Gaming Machines
The Trustees of New Zealand Community Trust would like to reiterate that the relationship and partnership that the Trust [has] with the D Group is
valued from a professional point of view.
With this in mind, and working within the requirements of the Licence Conditions set by the Department of Internal Affairs, the Trustees of New Zealand Community Trust would like to formalise the agreement reached with you last Friday to further the relationship between the D
Group and the New Zealand Community Trust in relation to the operation of the Trust’s gaming machines. For clarity purposes the D Group is defined by any outlet involving R, S, G or MD or combination of.
The Trust will:
1. Increase the following sites actual and reasonable expense
payments as detailed effective from January 2000.
Jays Bar  $22,595.00
Mates Bar  $22,595.00
Ox Bar  $25,595.00
Local Bar  $19,595.00
Bay 66  $22,595.00
Office Cafe  $22,595.00
Casino Club                   $17,095.00

The above figures are inclusive of GST and subject to suitable 5 documentation being supplied by the D Group supporting the payments as
per DIA regulations.
2.Pay the reimbursement of ‘Actual and Reasonable’ expenses, at the beginning of each month commencing January, for all sites controlled by the D Group on the following basis: 10
(a) The D Group supplying the correct documentation to support the expenses incurred.

(b) The combined percentage return to the community of all the D
sites not falling accumulatively below the required 33%.
(c) Acknowledge in writing the change to being paid at the beginning 15 of each month.
(d) Holda positive balance for each site equivalent to the site reimbursement paid, before any grants may be applied for from that site.
(e) Suspend grant applications between the acceptance of this offer 20 and 20 January to enable funds to build up to facilitate the payment at the beginning of the month.

The change of payment of actual and reasonable costs will commence on
1 January 2000. The schedule for this is attached:
D Group   25
Further to the above the Trust would like to engage the services of the D Group to oversee the operation of the groups gaming machines of a manual and or administrative nature. It will also include the daily and weekly auditing of each site as it is acknowledged that the combined turnover of the groups gaming machines requires a more stringent   30 approach to ensure the integrity and security of the proceeds.
It is envisaged that the above services would, on a time basis, extrapolated annually, incur a cost of $26.88 (twenty-six dollars, eighty-eight cents) per machine per month for each machine that falls within the D Group. This
cost would be borne by an increase of fixed costs on each machine by the   35 said $26.88. On current machine figures this will equate to $80k per annum, net of GST.
A detailed invoice from the D Group each month would be required and the reimbursement paid to the D Group in return.
In conclusion, the D Group agrees to:   40
•Sign new site agreements for all existing sites with NZCT for a further period of two years. These site agreements to commence from 1 January 2000.

• Offer NZCT first right of refusal on any new site the D Group is
involved with which will have gaming machines sited within that 45 site. This includes the new site in Porirua.

We trust the above is acceptable to you and if so please sign where indicated to enable the Trust to proceed on that basis.

Yours sincerely
[signature] Bill Day
General Manager/Trustee

AGREEMENT
The D Group acknowledges and agrees to the above arrangements.

RD ) )
On behalf of the ) [SIGNATURE] ) Dated [Date] D Group ) )

10

SD ) )
On behalf of the ) [SIGNATURE] ) Dated [Date] D Group ) )

Witnessed [signature]

Schedule of Site Payments Commencing 1 January 2000
D Group

Jays Bar  $22,595.00
Mates Bar  $22,595.00
Ox Bar  $25,595.00

Local Bar  $19,595.00
Bay 66  $22,595.00
Office Cafe  $22,595.00
Casino Club                   $17,095.00
Mid City Bar                  $14,003.80
Brix Bar  $15,063.80
NaeNae  $13,657.50
Hutt Park  $14,141.00
Baileys 818                   $10,935.00
Windmill  $12,465.00
Total $232,931.10”
The parties’ contentions
[20] The Crown case was that the agreement of 16 December 1999, providing as it did for increased site reimbursement payments and administration fees, created a right by the Ds to these payments, and therefore
the agreement was a valuable security. When considering this matter the Judge said at paras [17] – [18):
“[17] The agreement here is expressed to formalise a previous verbal agreement. It acknowledges the trust will increase sites’ actual and reasonable expense payments to stated amounts. In it the D Group agrees
to sign new site agreements for a further two years. The evidential background is that there had been references by the parties or their agents who completed the agreement to discussion about the quantum of site rentals being increased for sites that were considered ‘premium’: that is, had a high turnover.

[18] I find that the agreement is a valuable security. It determines positively the new site rentals the group was to be entitled to. The fact that an invoice or claim form had to be provided was the mechanical way by which the new site rentals would be paid.”

The plaintiffs say that the document in the present case was no more than 5 executory. Before there was an entitlement to the payments provided the services had to be performed and various invoices submitted; thus the plaintiffs

say the agreement was conditional. The plaintiffs say the agreement was also conditional on the new site agreement being signed with the New Zealand Community Trust for a further two years from 1 January 2000, as the 10 agreement provided and on the provision of services entitling them to payment.

The Crown submits that the Judge was correct when he identified the agreement determined positively the new site rental payments for the sites. The Crown says where a person is induced to sign a contract which gives a valuable benefit and the only conditions are those which the person inducing the contract 15 has the capacity to fulfil then a valuable security is created.
In the alternative, the Crown says this is a case governed by the second part of s 246(1), which is an alternative to “making a valuable security”. Section 246(1) provides as follows:

246. Obtaining by false pretence – (1) Every one is liable to 20 imprisonment for a term not exceeding 7 years who, with intent to defraud
or cause loss to any person by any false pretence, causes or induces any person to execute, make, accept, endorse, or destroy the whole or any part of any valuable security, or to write, impress, or affix any name or seal on
any document in order that it may afterwards be made or converted into or 25 used or dealt with as a valuable security.

The offence is said to be complete in the second part when an accused, with an intent to defraud by a false pretence, causes any person to affix their name or to write on any document in order that it may afterwards be made or

converted into or used or dealt with as a valuable security. The Crown says this 30 alternative overcomes the question of the claimed conditional nature of the

16 December 1999 agreement.

The plaintiffs say in response to this alternative submission that, because there is no evidence the plaintiffs ever signed the “new” agreements

contemplated in the agreement of 16 December 1999, then the agreement 35 remained conditional throughout.

Discussion

“Valuable security” was defined in the Crimes Act as follows:
valuable security includes every document forming the title or evidence
of the title to any property of any kind whatever; and also includes any 40 negotiable instrument, bill of exchange, cheque, or promissory note.
“Property” is defined as follows:
property includes real and personal property, money, electricity, and any estate or interest in any real or personal property, and any debt, and
any thing in action, and any other right or interest. 45
There are few contemporary cases which consider the meaning of this phrase in New Zealand. The most recent Court of Appeal authority is R v Webster [1944] NZLR 882. There the accused Webster was charged pursuant to s 265 of the Crimes Act 1908 that (at pp 882 – 883):

“. . . with intent to defraud by the threat that [he] would employ violence to the person of [Reilly] . . . did unlawfully compel [Reilly] to write his name upon a paper . . . in order that it may afterwards be converted into or used or dealt with as a valuable security.”

[29] Reilly had brought a petition to the Court to divorce his wife, alleging her adultery. In April 1944 he signed a statement which said he had committed adultery and accepted his wife had not done so. He said his divorce petition was motivated by a desire to overcome the effect of an earlier agreement with respect to a property in Oriental Parade. The earlier agreement
(in September 1942) said if the parties divorced then the husband would transfer his half-share in the Oriental Parade property to his wife unless it was the “wife’s own conduct (which was) the real and substantial cause of the separation or divorce” (at p 885).
[30] Finlay J, who gave the judgment of the Court, said at p 889:

“It is not saying too much of the [April 1944] document to say that, judged in the light of the facts current at the date of its execution and read in conjunction with the [18 September 1942] agreement, it armed the wife with as conclusive evidence as the circumstances allowed that she was entitled by law to have Reilly’s half-interest in the property transferred to
her. In other words, it established to the limit of possibility the right of the wife to claim by action the full ownership of the property.”

[31] Thus Finlay J identified the document of September 1942 as a conditional right to the Oriental Parade property conditional on the wife establishing any divorce or separation had not been caused by her misconduct.

In this context, therefore, the document signed by the husband acknowledging the “fault” was not the wife’s removed the conditional nature of the agreement of September 1942. These comments were reiterated at pp 889 – 890, where Finlay J stated:

“Brought into juxtaposition with the agreement of September 18, 1942,

and sued upon in a proceeding by the wife to establish her right to the property as a whole, it would be to her, and in such a suit, extremely valuable. It would in such a contingency and immediately the wife obtained the decree of dissolution of marriage which it as far as possible assured to her establish her right to an immediate transfer to her of her
husband’s interest in the property. So used or dealt with, it was a valuable security to her because it established beyond the limits of possible denial her right to a transfer under the prior [that is, 18 September 1942] agreement; and what is meant by a valuable security under the section is not merely such a paper as can be made the subject of sale or disposition,
but such a paper as can be used, in the hands of the person who obtains it, to procure money or money’s worth.
The document in the present case being capable of being used by the wife in a way which would enable her, with the maximum of possible certainty, to establish her claim to the whole property, it must, in my
opinion, be a document which could, after execution, be converted into or used or dealt with as a valuable security in terms of the section.”

[32] I note that the charge in Webster’s case alleged that the accused essentially forced Reilly to sign the April 1944 agreement so that it might afterwards be used as a valuable security. The idea of “later” (afterwards) using

the document as a valuable security referred to by Finlay J was presumably

when the wife required the husband to transfer the whole of the property to her and the husband’s statement of April 1944 established that she was not the cause of the divorce and thus could enforce the agreement of September 1942. [33] The only other recent New Zealand case of interest is R v Cattermole

[1997] DCR 210. In Cattermole the Crown case was that the accused had 5 caused another to execute agreements for sale and purchase selling land to the accused. Judge Keane (as he then was), after considering the definition of valuable security, said, at p 215:

“This definition in its general aspect is wide and non-exhaustive: all documents which either constitute title, or are evidence of title, qualify. 10
There is no constraint as to the form of property to which the document
must relate. Nor are the categories . . . examples of documents which conventionally and unambiguously constitute or are evidence of title. The most that one can or needs to say is that, to qualify, a document outside
those categories must be in some sense analogous. One way to express that 15 may be to say that, generally, the document must create an immediate chose in action.”

And further on p 215:

“An agreement for sale and purchase of land does not to my mind fall within the general part of the definition, or have attributes analogous to 20 those shared by the examples. It is not in itself title to land; that is constituted by the certificate of title, an elementary fact acknowledged as
is usual in the agreement itself. Nor is it evidence of title merely because it identifies who the registered proprietor is, and who in terms of the contract the proprietor will become if the contract is performed, any more 25 than a letter would be.”

Applying that test to the agreement, he concluded it was not a valuable security. He said:
“The agreement for sale and purchase did not determine positively that the accused had the right without more to take title to the property; nor did it 30 confer implicitly a correlative right, if need be, to enforce that right unconditionally by action. It was executory. It required first that the accused furnish consideration; that he pay not just the deposit agreed but
the balance of the purchase price. Until that stage was reached any claim
to title which he did have was conditional, and thus inchoate or merely 35 potential.”
I agree with Judge Keane’s approach, which is reflected in the construction and wording of s 246(1). There are, overall, two parts to the section. The first part creates an offence when the action of the accused causes another to make (among other actions) a valuable security. The second part 40 involves the action of the accused in causing another to (among other matters)

sign any document that can afterwards be made or converted into a valuable security. The second part of the section, therefore, is concerned with documents that are not valuable securities at the time of signing but can afterwards be

made into or used or dealt with as a valuable security. The first part will 45 therefore cover those situations where, upon execution of the document, the valuable security is created. The second part is in signing a document which

may later be made into a valuable security but which would not at the time of signing be a valuable security.

Judge Keane’s approach in Cattermole is similar to that of the English 50

Court of Appeal in R v King [1991] 3 All ER 705. In that case the appellant

was charged with inducing a bank, by fraudulent valuation of property, to advance money contrary to s 22 of the Theft Act 1986 (UK) (similar to s 246(1) of the Crimes Act). Payment of the money was effected by a clearing house automated payment system order (CHAPS), which effected an instantaneous

computerised transfer between the payer’s bank account and the payee’s bank account. Lord Lane CJ held that a CHAPS order was a “valuable security” because once processed and bearing the signatures of bank officials signifying it had been processed, it transferred money. The Court took the views that a CHAPS order created an unconditional right therefore over property
(here money). The Court said at pp 710 – 711:
“To argue that the transfer is the result simply of the actions of the bank officials is analogous to arguing that a cheque (incontestably a valuable security) is not efficacious to transfer property because there has to be bank activity before a credit appears in the payee’s account. In either case the
activity at the bank, or banks, is simply the incidental machinery by which the document is given its practical and intended effect, just as the postman who delivers the envelope containing a cheque becomes part of that incidental machinery.
In our judgment a CHAPS order, once processed, and bearing the
bank officials’ signatures which signify that it has been processed, is a document which transfers a right over property – that is the bank credit being a chose in action. It also creates the right over the chose and this proposition can be tested in this way. If the payee’s right to the bank credit were to be called in question, the CHAPS order could be relied upon as his
document of title to the credit.”
[37] The relevant question to test whether a document is a valuable security might therefore be framed in this way – whether the document in issue provided or showed an unconditional entitlement or right to the property.
[38] In Webster the answer to this question is somewhat obscured by the fact
that the charge involved the “afterwards” use of the document as a valuable security. However, once the document of April 1944 was signed by the husband the wife had unconditionally established her right to the whole of the property. All that was required was the use of the document to obtain a property right. [39] In Cattermole the right to the land did not exist at the time the agreement
was signed because the purchase price remained unpaid and had to be paid before the right to the land was triggered. In King the CHAPS order, which was the relevant document, gave an immediate entitlement to the money represented in it, and so was a valuable security.
[40] To return to the facts of this case, it cannot be said the agreement of
16 December 1999 was a valuable security on its face. The whole of the agreement was expressly conditional upon the signing of new agreements by the parties from 1 January 2000 committing themselves to two years of joint function. Presumably continuity of commitment by the Ds was important to the New Zealand Community Trust, given the additional payments it was

45proposing to make. Secondly, the entitlement to the monthly payment was dependent upon the expenses actually being incurred. The payment at the beginning of the month was effectively an “on account” payment which had to be justified by the expenses being incurred, the claim being reasonable and the completion of a claim form. If, for example, the licensed premises were closed

down (for any reason) shortly after a monthly payment, the monthly payment (already made) would not be justified as reasonable expenses and reimbursement in part would inevitably follow. This illustrates that the

16 December contract did not create an unconditional entitlement to the money specified in the contract, but a conditional entitlement dependent upon the services being performed. I note that the regulations governing the operation of such licences required detailed expense invoices based on actual and reasonable assessment. I am therefore satisfied that the agreement was not a valuable 5 security in the sense that it did not come within the first part of the definition

of s 246(1). In this sense I therefore disagree with the District Court Judge. [41] However, I am satisfied that the agreement of 16 December 1999 does come within the second part of s 246(1), in that there was evidence to

establish the plaintiffs, with intent to defraud by false pretence, induced the 10

New Zealand Community Trust to write or affix their name to the agreement of

16 December 1999 in order that it might afterwards be made or converted into or used or dealt with as a valuable security. Clearly it was both parties’ intention at the time the agreement of 16 December 1999 was signed for the

New Zealand Community Trust to pay to the Ds the increased amounts 15 identified. Thus, once the expenses claim was filed each month by the Ds, the parties anticipated that the Ds were entitled absolutely to the money received earlier in the month on account of expenses as long as it could be justified by

the expenses claim. Thus the document at that stage, when the expenses claimed were accepted, was therefore “afterwards” being used as a valuable 20 security entitling the Ds without further condition to the money claimed as expenses. I am therefore satisfied that there is evidence to justify a charge under

the second part of s 246(1). As to the formal orders, I will make those at the conclusion of this judgment.

Reasonable expense claim – s 229A 25

SD is charged with 11 counts of using a document with intent to defraud.

The plaintiffs submitted to the District Court Judge that no reasonable jury could conclude that the documents alleged to have been used to obtain the pecuniary advantage were in fact used for that purpose.

The Crown case revolves around the claim forms from SD which are 30 said to identify the actual and reasonable expenses claimed by the Ds for the operation of the gaming machines.
As I have detailed, the New Zealand Community Trust was entitled in law to pay the site operators a suitable reimbursement for actual and reasonable expenses incurred in having the gambling machines in their licensed premises. 35

The New Zealand Community Trust agreed to prepay expenses to the Ds for

particular sites which the Crown says would then have to be justified by the Ds providing claim forms detailing the actual and reasonable expenses incurred by them. This obligation to provide such claim forms, as relevant in this case,

began from early February 2000 and, as far as the expenses were incurred, from 40

January 2000. The Crown case is that as a result of an audit by the Internal

Affairs Department the plaintiff SD completed and filed, in June 2000,

11 expense claim forms for periods from January to June 2000. The Crown says on investigation the forms showed significant discrepancies that in turn gave

rise to the 11 counts the plaintiff faces. 45

Plaintiffs’ case

The plaintiff says the Crown case is based on the claim that the document used to obtain the pecuniary advantage here was the New Zealand Community Trust’s actual and reasonable expense form. They submit that in

terms of s 299A the Crown must establish that the claim form was used to 50 obtain the pecuniary advantage. However, the plaintiffs say the pecuniary

advantage was obtained at the beginning of each month when the expenses claim was paid by the New Zealand Community Trust, well before any of the forms were in existence and before they were filed with the trust. And the plaintiffs say when the expense forms came into existence they would have had

no effect on the amount of money paid to the D Group in any event. Thus the plaintiffs say the documents could not have been used to obtain the pecuniary advantage.

Judge’s decision
[46] After setting out in brief the facts, the Judge said:

“. . . The argument that follows is that the forms are really a simple confirmation of financial agreement previously reached and that the arrangement would be that if the forms filed with the New Zealand Community Trust show that the expenses were less than previously agreed upon then there would be an adjustment, otherwise there would not be.”
[47]      And the Judge said in conclusion at para [24]):
“[24]   It is an interesting argument in light of the accused’s submissions that the financial agreement was not a valuable security.”
[48]   The Judge therefore rejected the proposition that there was no evidence upon which a reasonable jury properly directed could convict, and considered
the issue was properly left to the jury.
[49] The plaintiffs say that the Judge’s conclusions do not illustrate a proper
consideration of its submissions. The plaintiffs reiterate that the claim forms played no part in determining what was paid to the D Group and therefore could not be used to obtain a financial (pecuniary) advantage as claimed.

Discussion
[50] I reject the plaintiffs’ argument. First, the terms of the agreement of
16 December 1999 make it clear that although a sum estimated to reflect actual and reasonable expenses was paid at the beginning of the month for that month, the payments paid were still to be justified and the payments were still subject

to, as the agreement said:
“. . . suitable documentation being supplied by the D Group supporting the payments as per Department of Internal Affairs’ regulations.”
[51] The agreement provided that the reimbursement of actual and reasonable expenses at the beginning of the month was to be undertaken “on the following
basis”, including:
(a) the D Group supplying the correct documentation to support the expenses incurred; and
(b) the combined percentage returned to the community of all the D sites not falling cumulatively below the required 33 per cent.

[52] Therefore, the agreement between the parties provided the pecuniary advantage did not actually accrue and become an entitlement until the right to the payment was confirmed (or otherwise) by the filing of the claim for actual expenses incurred and the acceptance of those by the New Zealand Community Trust, as reasonable. The agreement clearly contemplates, as in law it must, that
the plaintiffs are only entitled to be paid for actual and reasonable expenses.
Until these expenses are approved by the charity, here the New Zealand
Community Trust, as “reasonable”, the first of the month payments are nothing more than an advance against expected expenses incurred.

The Crown case is also that the plaintiffs, by filing the expense claims in June 2000, were hoping to defuse interest in their claims by the audit section of the Department of Internal Affairs. In addition, the Crown says that by completing expense claims set at the level they did, the plaintiffs were

attempting to set up actual and reasonable claims for the future, beyond 5

June 2000, thereby also seeking a pecuniary advantage. The Crown says this

was part of creating an expectation in the mind of the New Zealand Community Trust of the appropriate levels of actual and reasonable expenses that could properly be justified to the Department of Internal Affairs.

Finally, there is SD’s interview by Mr Winter of the Department of 10

Internal Affairs. Mr D at the interview accepted that he had completed the

actual and reasonable expense claim forms. As to the use for which the forms were to be put, he was asked:

“DW: What was the purpose of the forms as far as you were aware?

SD: As we understood the forms were a mechanism to substantiate 15

existing site rentals. Paid by the trust prior to filling out these forms. We assumed that the component parts of the form enabled the trust
to establish reasonable market costs.

DW: Why do you think you were given the forms?

SD: I can only think that the forms were there to substantiate what we 20

were being paid for the operation of the gaming operation. DW: Is the information given in the forms correct?

SD:It is my belief that the information is an accurate representation of reasonable costs based on normal market values for that year. It is
also my belief that some items were estimated as we never had time 25
to assess exactly.

. . .

DW: How do you see the forms as being used?

SD: I saw them being used for taking into account the size of the

operation to take more than market values for goods and services 30
provided. It is a claim form for reasonable expenses occurred in the gaming operation. We were never given any guidelines.

DW: Do you expect that a claim was submitted by yourselves that

New Zealand Community Trust would take your final claim amount
in consideration given that they have designed the form and 35
distribute it to be completed? SD: Yes.

DW: Would you expect the figures in the claim form that have been transferred from your own calculations attached to each form to be accurate? 40

SD: I submitted the calculations based on what the operational partners

and directors thought fair and reasonable.

DW: Would you think that the New Zealand Community Trust expect your calculations to be accurate?

SD: Yes.” 45

[55] This evidence in total in my view is sufficient upon which a reasonable jury properly directed could find the expenses claim forms were used to obtain a pecuniary advantage. There is evidence that the jury could accept that the first of the month payments were to be subject to justification through the actual and

reasonable expenses claim. And it was only when that expenses claim was made and accepted that there was an entitlement to the money that is the pecuniary advantage here. And there was evidence SD knew the purpose of these expense claim forms. And so the pecuniary advantage could either be the entitlement to the actual and reasonable expenses as claimed or it could be, in
addition, as the Crown submits, a future entitlement to the level of expenses reflected in the reasonable and actual claim forms supplied in June 2000. Either way, in my view the Judge was correct to conclude that the plaintiff should not be discharged under s 347 of the Crimes Act. Although the Judge’s decision was brief, extensive reasons where an application for s 347 discharge
is being refused are not required and often are appropriately left unexpressed. [56] The plaintiff has been unable to show that the decision of the Judge is clearly wrong. There are in my view no grounds for a judicial review established on point three of the plaintiffs’ claim.

Conclusion and orders

[57] As to the charge as laid pursuant to the first part of s 246(1), I am satisfied the prosecution cannot establish the document was at the time of its attestation a valuable security. Therefore, I consider the Judge was wrong in law when he refused the application pursuant to s 347 of the Crimes Act. However, there is evidence sufficient to put the accused on trial for an offence
which alleges a breach of the second part of s 246(1) of the Crimes Act. Given those conclusions, the appropriate approach for the District Court Judge is to allow the Crown to substitute a charge under the second part of s 246(1) and to discharge the accused with respect to the current charge under s 246(1). I refer the matter back to the District Court to carry out these directions.
[58] I refuse the orders sought with respect to the charges under s 229A. [59] I suggest that in the circumstances no order for costs be made. However, if either party seeks costs, memoranda should be filed within 21 days and in response a further 14 days.

Application dismissed.

Solicitors for the accused: Treadwell Stacey Smith (Wellington).
Solicitors for the Crown: Crown Law Offıce (Wellington).

Reported by: Carolyn Heaton, Barrister

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Citations

D v District Court at Wellington HC Wellington CIV 2005-485-1426 [2006] NZHC 1678

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[2006] NZHC 1678

19 April 2006