Ede v R
[2010] NZCA 358
•6 August 2010
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Ede v R
Court of Appeal Wellington CA694/2008; [2010] NZCA 358
14 June; 6 August 2010
Chambers, Winkelmann and Fogarty JJ
Criminal practice and procedure – Fair trial – Jury direction – Judge’s duty to
put case to jury – Whether goes beyond summary of arguments where counsel performs poorly.
Mr Ede was a mortgage broker and director of finance companies. He provided some refinancing advice, indirectly, to two brothers who owned a farm and were struggling with the mortgage. To recover fees he believed were owing, he
purchased their mortgages for $208,000. After checking with his lawyer, he reached an agreement to sell the farm, exercising his power of mortgagee sale, for $220,000, a gross undervalue. The purchaser then agreed to sell the land to neighbours for $340,000, though this agreement was cancelled when title was not available. Ultimately, as part of an elaborate arrangement, the brothers
redeemed the mortgage for $267,000 and sold it to the neighbours for
$270,000. Mr Ede split the profit of about $50,000 with the original would-be
purchaser. The Crown alleged that Mr Ede and the purchaser had concocted a plan to eliminate the brothers’ equity and split it between themselves, which involved breaching Mr Ede’s duty to obtain the best price reasonably available.
Mr Ede was convicted by a jury of obtaining a document capable of being used to obtain a benefit, namely the sale and purchase agreement between his company and the purchaser. Mr Ede appealed, arguing that the Judge had misdirected the jury in a number of respects relating to the ingredients of dishonesty and as to the duties of mortgagees.
Held: Trial judges had a responsibility to ensure that the defence case was properly put to the jury; this responsibility was all the heavier in cases where the performance of defence counsel had been poor. The Judge had a duty to isolate and marshal the evidence for the Crown and defence on each issue. The Judge had failed properly to put to the jury factors suggesting that the sale price
was not dishonestly low and that Mr Ede could not have known he was acting dishonestly because he had relied on legal advice. The summing-up was also wrong in law on several issues (see [46], [47], [48], [55], [56]).
Result: Appeal allowed; new trial ordered.
Cases mentioned in judgment
B v R CA59/97, 30 July 1997.
Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949, [1971]
2 All ER 633 (CA).
DownsviewNominees Ltd v First City Corporation Ltd [1993] 1 NZLR 513, [1993] AC 295 (PC).
Hayes v R [2008] NZSC 3, [2008] 2 NZLR 321.
Macleod v R [2003] HCA 24, (2003) 214 CLR 230, (2003) 197 ALR 333.
Peters v R [1998] HCA 7, (1998) 192 CLR 493, (1998) 151 ALR 51. 5
R v Coombridge [1976] 2 NZLR 381 (CA).
R v Firth [1998] 1 NZLR 513 (CA).
R v Ghosh [1982] QB 1053, [1982] 2 All ER 689 (CA).
Appeal
This was an appeal by Bryce Graeme Ede against conviction in the High Court 10 before Judge and jury for obtaining, with intent to defraud, a document capable
of being used to obtain a benefit.
SJ Bonnar for Mr Ede.
MF Laracy for the Crown.
The judgment of the Court was delivered by
CHAMBERS J.
Cur adv vult 15
Farm sale at an undervalue
Arnold and Mervyn Heta, who are brothers, owned a farm at Tauwhare. Through the fraud of others not parties to this appeal, the Hetas became subject 20 to two oppressive loans, which were secured against their previously unencumbered property. The Hetas got behind in their payments on both loans.
The prospect of a mortgagee sale loomed large.
Malcolm McKelvey, a fraudster who had been instrumental in arranging
the loans for the Hetas and then fraudulently siphoning their funds, contacted 25
Bryce Ede, the appellant, who was a mortgage broker and director of a number
of finance companies. Mr McKelvey asked Mr Ede if he could arrange refinancing of the Hetas’ loans. Mr Ede put together some proposals, but the Hetas did not accept his refinancing offers. Mr Ede said this work was worth
$12,000 in fees to him. Despite the fact that the Hetas had never commissioned 30 his services and did not take up the offers, Mr Ede decided the Hetas owed him
$12,000 and he embarked on a process of what he called “debt recovery”.
Mr Ede approached Basecorp Finance Ltd, the second mortgagee, and told them that Mr McKelvey was looking to buy the first mortgage held by Provincial Finance Ltd. This concerned Basecorp, who believed that 35
Mr McKelvey, if he acquired the Provincial mortgage, was likely to sell the
farm for little more than what was owing on that mortgage, with the result that subsequent chargeholders, including itself, would lose out. Basecorp thus decided to acquire the Provincial mortgage first. On 9 May 2002, it signed an
agreement with Provincial to purchase its mortgage for $142,000. 40 [4] Mr Ede then offered to buy both securities from Basecorp. An agreement to that effect was reached on 18 May. The purchaser was Statesman Holdings Ltd, one of Mr Ede’s companies. The purchase price was the value of
the securities, $208,000.
Prior to signing the Basecorp deal, Mr Ede had already had discussions 45 with Bill Sterling, the director of Aroha Fisheries Ltd, to privately sell the land
to Aroha as soon as the mortgages were acquired. The sale would be pursuant to the mortgagees’ power of sale. The sale price would be $220,000.
Mr Sterling sent Mr Ede a signed offer in that sum on 9 May. According to Mr Ede, he faxed a copy of the offer to his normal solicitor, Don Howden, seeking advice. He then decided to seek advice from Bob Warburton, an Auckland lawyer recommended by Mr Sterling. According to Mr Ede,
Mr Warburton thought the proposed sale price was reasonable. On 14 May, Mr Ede signed the offer and an agreement was thereupon entered into. (We shall call that agreement “the Aroha agreement”.)
[6] The Crown case was that Mr Ede knew, when he signed the Aroha agreement, that he was selling the farm at a gross undervalue. A real estate
agent had recently told him that the Hetas’ property had a market value of
$350,000, and possibly even up to $400,000 if properly marketed. He also
knew that a neighbour, the Moses family, who for two generations had leased most of the Heta land, had offered to pay $340,000 for it.
[7] At the same time Mr Ede was agreeing to sell the land for $220,000,
Aroha entered into an agreement with the Moses family to sell the land for
$340,000. That agreement, at the Moses’ solicitor’s request, was made subject
to a condition that Aroha should satisfy the purchasers by 22 May that it did in fact have clear title to sell. When Aroha was unable to satisfy the Moses family on that, they cancelled the agreement.
[8] On 6 June, the Hetas, accompanied by Mr Sterling, went to see a Tauranga solicitor, Areta Gray. Mr Sterling told Ms Gray the Hetas’ property was in danger of being sold and explained that Statesman, who he said had bought the mortgages, was looking at selling the property to Aroha. Ms Gray agreed to act for the Hetas. She decided the best course of action was for them
to try to redeem the mortgages. To do that the land would have to be sold. She contacted the Moseses to negotiate a price for the Hetas’ land and Statesman to advise that the Hetas wished to redeem.
[9] Mr Warburton, on behalf of Statesman, responded that the redemption figure would be $265,000, which included “consideration” for Aroha agreeing
to cancel the Aroha agreement, with additional interest accruing daily. The Hetas agreed to pay this. They subsequently agreed to sell most of their land to the Moseses for $270,000. (Still later they sold the rest for $80,000, salvaging something from the mess.)
[10] On 4 July, settlement took place. The Moseses paid $270,000 to the
Hetas in exchange for the land. The Hetas paid Statesman $267,000 in exchange for the discharge of the mortgages. Statesman paid Basecorp
$214,000 for the assignment of the securities. Statesman’s profit of about
$50,000 was then split 50/50 between Aroha and Senator Holdings Ltd, another of Mr Ede’s companies. The Aroha agreement was discharged by agreement.
[11] The Crown case was that in early May 2002 Messrs Ede and Sterling concocted a plan whereby they would deliberately eliminate the equity of the Hetas with a view to sharing that equity between them. Mr Ede knew that, by so doing, he was breaching the obligation he owed to the Hetas under s 103A of the Property Law Act 1952, namely “a duty to take reasonable care
to obtain the best price reasonably obtainable as at the time of sale”.
[12] Mr Ede faced two charges. The first was that he, with intent to defraud, obtained a document capable of being used to obtain a benefit, namely the agreement for sale and purchase between Statesman and Aroha, contrary to s 229A(a) of the Crimes Act 1961. The second charge was that Mr Ede, with
intent to defraud, used a document capable of being used to obtain a benefit, namely a letter recording the redemption price for the mortgage in respect of
the farm for the purpose of obtaining for himself or another pecuniary advantage, contrary to s 229A(b). A jury found Mr Ede guilty on the first charge and not guilty on the second.
Mr Ede now appeals against his conviction.
Issues on the appeal 5
Mr Bonnar, for Mr Ede, raised three principal grounds of appeal.
The first complaint concerned the conduct of Mr Ede’s trial counsel, Mr Comeskey, both prior to trial and at trial. Mr Bonnar submitted Mr Comeskey’s performance was so abysmal that a miscarriage of justice had
arisen. 10
The second complaint concerned the prosecutor’s conduct at trial. This related to the Crown’s use of certain documents which allegedly had not been disclosed to the defence.
The third ground of appeal related to alleged misdirections by the trial Judge, Judge Field. We are satisfied Mr Ede must succeed on this ground of 15 appeal. In those circumstances, we find it unnecessary to deal with the first two complaints, although we shall refer in passing to Mr Comeskey’s lamentable closing address.
Did the Judge misdirect the jury on the first count?
Obtaining a document 20 [18] As we have said, Mr Ede was charged under s 229A(a). Because that section is no longer in force, we set it out:
229A. Taking or dealing with certain documents with intent to defraud – Everyone is liable to imprisonment for a term not exceeding
7 years who, with intent to defraud, — 25 (a) Takes or obtains any document that is capable of being used to
obtain any privilege, benefit, pecuniary advantage, or valuable consideration; or
(b) Uses or attempts to use any such document for the purpose of
obtaining, for himself or for any other person, any privilege, 30 benefit, pecuniary advantage, or valuable consideration.
The first count was framed in terms of Mr Ede having obtained a document with intent to defraud. The document relied on was the Aroha agreement. Mr Bonnar took the point, however, that the Aroha agreement was
the same document as the Aroha offer; all that had happened to it was that 35
Mr Ede subsequently signed it as vendor. His act of signing, however, was not
an act of “obtaining”. He obtained the document on 9 May when Mr Sterling gave it to him.
The effect of Mr Bonnar’s argument was this. If the only document “obtained” was the Aroha offer, then the trial on this charge went awry. 40 [21] First, Mr Ede obtained that document on 9 May. The section requires
the “intent to defraud” to be present at the time of the obtaining. That would have required an investigation of Mr Ede’s state of mind prior to and at the time of receiving Aroha’s offer. The Judge never asked the jury to focus on that.
At trial, the focus was exclusively on 14 May. On the evidence, there was 45 potentially a significant difference between Mr Ede’s knowledge of his obligations on 9 May compared with 14 May. By the latter date, he had received advice from two solicitors about his obligations under s 103A of the
Property Law Act. Ms Laracy, for the Crown, accepted that, if the document were “obtained” on 9 May, then the trial had gone awry. She accepted the entire focus had been on Mr Ede’s knowledge and intent at the time he signed the agreement on 14 May.
[22] Secondly, Mr Bonnar submitted that if, as he said, the only document obtained was Aroha’s offer, it could not found a charge under s 229A(a) because an offer was not a “document ... capable of being used to obtain any ... benefit”. Only when it was signed by the other party did it acquire that status. Ms Laracy accepted that was correct.
[23] Ms Laracy’s answer to Mr Bonnar’s submission was that a further document was “obtained” on 14 May. That document was the signed Aroha agreement. It was a document capable of being used to obtain a benefit. It was a different document from the offer.
[24] We asked Ms Laracy how it could be said Mr Ede “obtained” a
document by signing it. She referred us to a passage in Adams on Criminal Law
to the following effect:1
The making of a copy of a document with intent to use the copy, rather than the original, to obtain property, etc may well be considered to be an “obtaining” of the copy, which is itself a document for the purposes of the
section.
[25] No authority is cited for that proposition. That is not to say we doubt it; it may well be accurate in certain circumstances. But what “copying” took place on 14 May? Ms Laracy referred to the fact that the copy of the Aroha agreement in evidence bore a fax transmission record on the top: it had been
transmitted at 5.23 pm on 14 May. We are not prepared to draw any inferences from that. We do not know whether Mr Ede signed the original document he was given on 9 May or an identical copy subsequently faxed through. None of this was explored at trial. It would be ridiculous if Mr Ede’s liability hinged on whether he ended up signing the original document given to him by
Mr Sterling or an identical copy which had been perused by his solicitors or both.
[26] In any event, on Ms Laracy’s argument, the copy allegedly faxed through from Mr Ede’s solicitor to Mr Ede was still just an offer, and, on her argument, an offer was not a document capable of being used to obtain a
benefit.
[27] We therefore accept Mr Bonnar’s submissions on this matter. The truth of the matter is that the Crown made the wrong charge. What Mr Ede should have been charged with is using a document with intent to defraud. He used it when he signed it on Statesman’s behalf as vendor and advised Mr Sterling of
that fact. That did occur on 14 May. We suspect the wrong charge arose from the Crown’s lack of detailed knowledge prior to the trial of the order in which events occurred. The Crown did not receive much assistance prior to trial from Mr Ede or from Messrs Warburton and Sterling, both of whom were also charged in respect of the Heta fraud. The Crown case as to what Messrs Ede,
Warburton and Sterling had been up to was derived to a significant extent from documents and notes on Mr Warburton’s file. Neither Mr Warburton nor Mr Sterling gave evidence. It was Mr Ede’s evidence that shed light on what had happened when.
1 Bruce Robertson (ed) Adams on Criminal Law (looseleaf ed, Brookers) at [CA228.01].
What should have happened is that the Crown should have applied at trial under s 335(1) of the Crimes Act to amend the charge “to make it conformable with the proof”. Instead what happened is that everyone proceeded as if it did not matter whether the charge was obtaining or using. The Judge wrongly treated the issue of “obtaining” as effectively a non-issue.2 5
The dishonesty directions
Mr Bonnar further submitted the Judge had erred in the directions he gave concerning the elements of the offence encapsulated within the expression “with intent to defraud”. For the purposes of the discussion that follows, we assume we are wrong in our view that the relevant document was “obtained” on 10
9 May. We assume the Judge was right in effectively holding that Mr Ede
obtained the document when he signed it. Even on that basis, however, the Judge’s directions were flawed, as Mr Bonnar submitted. Certain matters could not have been in dispute on the evidence, including Mr Ede’s:
(a) He signed the Aroha agreement. (To reiterate, we consider this was an 15 act of use of the document rather than an act of obtaining it, but for present purposes, we are assuming this was an act of obtaining.)
(b) The agreement was a document.
(c) The agreement, at least when signed by Mr Ede, was capable of conferring a benefit on Statesman. If the agreement was settled, 20
Statesman would have, instead of a debt owed by the Hetas in the sum
of approximately $208,000 and a security over their land, cash of
$220,000. That was something Mr Ede wanted.
Item (c) was not left as an issue for the jury. In the absence of a formal admission by Mr Ede, which was neither asked for nor given, it should have 25 been left. The Judge seems simply to have assumed the agreement was capable
of conferring a benefit.
There should have been two further issues for the jury. Had the Judge employed a question trail, they might have been expressed as follows:
• Are you sure that Mr Ede, in accepting the Aroha offer and making 30 the Aroha agreement, acted dishonestly?
• If so, are you sure that Mr Ede knew his acts of accepting the Aroha offer and making the Aroha agreement were dishonest?3
The section uses the expression “with intent to defraud”, but that expression, as the Supreme Court said in Hayes v R, has been “conventionally 35 equated with dishonesty”.4 The concept of dishonesty is an easier concept for
a jury to understand.
It is important to recognise that the jury should have been required to grapple with two issues. The Supreme Court explained this in Hayes:
This is not a case where we can exercise our powers under s 386(2) of the Crimes Act because of the other errors in the Judge’s approach to which we now come.
We shall call these two issues “the first dishonesty issue” and “the second dishonesty issue” respectively.
Hayes v R [2008] NZSC 3, [2008] 2 NZLR 321 at [32]; see also R v Coombridge [1976]
2 NZLR 381 (CA) at 386–387 and R v Firth [1998] 1 NZLR 513 (CA) at 519. Australian
courts have made the same equation: see Macleod v R [2003] HCA 24, (2003)
214 CLR 230 at [34].
[42] It is important for an understanding of what follows to distinguish between two concepts. The first is whether the conduct of the kind in question should be categorised as dishonest.5 The second is whether the mind of the particular accused was dishonest. It is seldom that any issue
arises at trial in respect of the first concept. But where it has arisen, the correct approach to its resolution has proved controversial. What is normally in issue at trial is whether the mind of the particular accused was dishonest. That is conventionally assessed subjectively by reference to what the accused knew or believed the circumstances to be.
[34] The difference between the two concepts was also well explained by the English Court of Appeal in R v Ghosh,6 a case referred to with approval by the Supreme Court in Hayes.7 The Court of Appeal said:8
In determining whether the prosecution has proved that the defendant is acting dishonestly, a jury must first of all decide whether according to
the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.
If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing
was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely
believes that he is morally justified in acting as he did ...
Cases which may be described as borderline, such as Boggeln v Williams [1978] 1 WLR 873, will depend upon the view taken by the jury as to whether the defendant may have believed what he was doing was in accordance with the ordinary man’s idea of honesty. A jury might have
come to the conclusion that the defendant in that case was disobedient or impudent, but not dishonest in what he did.
[35] We appreciate that Ghosh has been the subject of some criticism. For instance, the High Court of Australia did not follow it in Peters v R.9 While there may be some justified criticism of the precise wording used by the
English Court of Appeal, we are nonetheless satisfied that the Court’s recognition of two different concepts was correct. Indeed, Hayes, by which we are bound, expressly recognises the two concepts. It is essential that the jury form a view as to whether the defendant’s conduct was, in all the circumstances, dishonest. The jury makes that assessment based on the
objective facts as they find them, which facts will almost inevitably include findings as to the accused’s knowledge of relevant facts. But that is just the first step. The jury must then determine whether the defendant knew or believed his or her conduct was dishonest.
5 For example, it may be arguable that the use of a cheque in a particular way is not capable of being regarded as dishonest, whatever the state of mind of the accused.
6 R v Ghosh [1982] QB 1053 (CA).
7 At [34], [41] and [46].
8 At 1064.
9 Peters v R [1998] HCA 7, (1998) 192 CLR 493.
As the Supreme Court observed in Hayes, the first concept will not normally be in issue. Whether conduct is dishonest or not is usually very clear. But the present case was one where, on all the evidence, both concepts were truly in issue. It was possible on the evidence that Mr Ede might raise as a
reasonable possibility that his act in signing the agreement was not dishonest. 5
Even if the jury found it was dishonest, it was possible the jury might find that
he did not know it was dishonest because he had relied on Mr Warburton’s advice that he could safely accept Aroha’s offer.
We shall now consider the two concepts and discuss how the Judge dealt
with them. 10
The first dishonesty issue
The Judge put this issue to the jury somewhat briefly, but unfortunately wrongly. He quoted s 103A to the jury. He paraphrased that duty as follows:
In other words, to preserve the equity of the owners of the property, the Hetas in this case, so that they were able to obtain from the eventual sale 15 what it was worth and not be defrauded, as the Crown would have it, of money that they would otherwise have properly received.
That explanation does not, with respect, accurately convey the mortgagee’s duty when exercising its power of sale. A mortgagee does not have
a duty “to preserve the equity of the owners of the property”. Nor is the 20 mortgagee’s duty to ensure that the mortgagor is “able to obtain from the eventual sale what it was worth”. A mortgagee’s duty is much more limited.
The Privy Council in Downsview Nominees Ltd v First City Corporation Ltd
described the duty in these terms:10
If a mortgagee exercises his power of sale in good faith for the purposes of 25 protecting his security, he is not liable to the mortgagor even though he might have obtained a higher price and even though the terms might be regarded as disadvantageous to the mortgagor. Cuckmere Brick Company Ltd v Mutual Finance Ltd [1971] Ch 949 is Court of Appeal authority for the proposition that, if the mortgagee decides to sell, he must 30 take reasonable care to obtain a proper price but is no authority for any wider proposition.
Following Downsview, Parliament amended the Property Law Act by inserting s 103A, which effectively codified the duty of care enunciated in Cuckmere and endorsed in Downsview. 35 [41] The Judge in the present case, after referring to s 103A and his paraphrase of it, went on to say to the jury:
So there is a duty on Mr Ede as a mortgagee to obtain the best price reasonably obtainable at the time of the sale, and that [it?] is the Crown
case that he did not do that because if the property was sold at a much 40 reduced price, the Hetas would not get anything, but that when the property was unsold by Mr Ede, he could sell it for what the property was worth and get from the property the money that would otherwise have
gone to the Hetas. That is the basis of the Crown case in respect of that. In doing this, he was intending to defraud the Hetas of money that was 45 otherwise available to them. The Hetas are not named in the document [the indictment], but they do not have to be. So that is in respect of count 1.
Downsview Nominees Ltd v First City Corporation Ltd [1993] 1 NZLR 513 (PC) at 524.
[42] The difficulty with that explanation is that it effectively equated a breach of s 103A with dishonesty. While, of course, it was essential for the Crown to show that Statesman had breached its duty under s 103A, a mere breach of duty was not of itself sufficient to categorise the exercise of the power of sale
as dishonest. After all, a mortgagee who is merely negligent in exercising the power of sale may breach s 103A, but his negligence does not mean his conduct was dishonest. The Judge did not instruct the jury that what they really had to decide, under this first limb, was whether what was done was dishonest. [43] The Judge needed to explain to the jury that, in assessing whether the
conduct was dishonest, they had to consider all the circumstances surrounding the exercise of the power of sale. This would involve assessing the evidence as to Mr Ede’s relationship with Mr Sterling, his attempts to ascertain what the farm was worth, his knowledge of what the Moseses were prepared to pay and any conditions which might attach to any offer or agreement with them. Of
prime importance would be the extent of any discrepancy between what Aroha was offering and what someone else might be prepared to offer. Although the Judge referred to this evidence later in the summing-up when discussing the Crown case, he did not refer to it when explaining to the jury this element of the charge. That was simply left on the basis of s 103A.
[44] Mr Bonnar submitted the Judge had reinforced this error in a later part of the summing-up where he effectively equated the elements of this crime with a breach of the s 103A civil obligation. The Judge said:
Now, for the Crown as I say, Ms Mann [the prosecutor] submits that
Mr Ede was acting dishonestly. He has committed a criminal offence or
offences here. The fact that there may be a civil remedy in addition to this is not relevant and that of course is correct. If somebody throws a brick through your window and breaks it, you are entitled to sue them civilly for the damage to your window, but they have also committed a criminal offence, have they not, of intentional damage of your window. So the fact
that you have a civil remedy does not preclude a criminal action, a criminal case. They are not mutually exclusive. You can have both.
[45] We accept Mr Bonnar’s submission that this passage tended to reinforce the message that this case was all about whether s 103A had been breached. The analogy was unfortunate, in the circumstances. It is true that if one throws
a brick through another’s window and breaks it, one commits, at the same time, the crime of intentionally damaging property and the tort of trespass to land. But it is not correct that if a mortgagee sells a mortgaged property in breach of s 103A of the Property Law Act, he or she is necessarily committing a crime under s 229A(a) of the Crimes Act. Indeed, most mortgagees who breach
s 103A are not fraudsters; they have merely been negligent.
[46] We also observe that Mr Ede’s defence on this issue, weak though it may have been, was not really put to the jury. In part we recognise that this was because of Mr Comeskey’s appalling final address to the jury. Mr Ede, on this appeal, complained about Mr Comeskey’s conduct in this respect. He said that,
at trial, he had asked Mr Comeskey to let him have a draft of the closing so that he could go over relevant issues with him and ensure that the important points were being covered. Mr Comeskey told Mr Ede “that he didn’t draft closing addresses”. Mr Ede, before us, complained that, in his view, “the address was unstructured, ill-conceived, lacking direction, utilised inappropriate analogies
and comparisons, and was nonsensical”. While we might have employed less colourful and more restrained language, we agree with the underlying
sentiment. Trial judges, however, have a responsibility to make sure that the defence case is properly put to the jury; that responsibility is all the heavier in cases where defence counsel’s performance has been poor. The undesirability of judges simply summarising counsel’s final addresses is demonstrated in a
case like this. The Judge was under a duty to isolate the issues and marshal the 5 evidence for Crown and defence on each – and all the more so because of defence counsel’s failure in that regard.
The defence case which should have been put was that a price of
$220,000, while low, was not so low as to be dishonest. In this regard, the
Judge should have pointed out the uncertainties of the Moses’ agreement. It was 10 conditional on finance, unlike Aroha’s. It also required the vendor to provide vacant possession; the Aroha agreement did not require that. There was evidence before the Court that the Hetas might prove difficult to remove. In addition, there was evidence of a government valuation of $288,000. A valuer
had in March 2001 valued the property at $317,000. Taking into account those 15 figures and the fact this was a forced sale, the jury could not be satisfied the conduct, even if negligent, was dishonest. None of that was effectively put to
the jury.
We appreciate that defence was not strong. That is not the point. Even
weak defences must be put. 20
The second dishonesty issue
We now turn to the second dishonesty issue. It is not enough that the jury thinks the defendant’s conduct is dishonest. The Crown must show the defendant knew or believed his or her conduct was dishonest.
The difference between the two concepts is well illustrated by an 25 example the English Court of Appeal gave in Ghosh:11
Take for example a man who comes from a country where public transport is free. On his first day here he travels on the bus. He gets off without paying. He never had any intention of paying. His mind is clearly honest; but his conduct, Judged objectively by what he has done, is 30 dishonest. It seems to us that in using the word “dishonestly” in the Theft
Act 1968, Parliament cannot have intended to catch dishonest conduct in that sense, that is to say conduct to which no moral obloquy could possibly attach ...
If we are right that dishonesty is something in the mind of the accused 35 (what Professor Glanville Williams calls “a special mental state”), then if
the mind of the accused is honest, it cannot be deemed dishonest merely because members of the jury would have regarded it as dishonest to embark on that course of conduct.
In other words, if the accused can satisfy the jury that it is a reasonable 40 possibility that he or she believed he or she was acting within the law, that would be a defence.12 That concept is now caught by the requirement in the
new s 228 of the Crimes Act, which replaced s 229A, with which we are concerned, for the prosecution to prove the accused acted “dishonestly and without claim of right”.13 45
11 At 1063–1064.
B v R CA59/97, 30 July 1997; Hayes at [32]; Coombridge at 387.
It is clear that Parliament did not consider it was changing the law in substituting
[52] In Hayes, the issue was whether the accused’s belief as to the honesty of his or her conduct had to be reasonable. New Zealand law had traditionally not required “the accused’s belief to be objectively reasonable”, a proposition which the Solicitor-General sought to argue was out of line with the
jurisprudence of England, Australia and Canada.14 Our Supreme Court, after
carefully analysing the overseas authority to which it had been referred,
concluded that the traditional New Zealand approach was correct and was not out of line with overseas authority. The Court concluded that “a belief does not have to be reasonable or based on reasonable grounds”.15 The Court added:
[50] ... Of course, as is universally the case when this approach is taken, the reasonableness of the belief is relevant to whether it was actually held.
[53] The need for the Crown to prove that the accused appreciated that his or her conduct was dishonest does not bring about a state of affairs in which “Robin Hood would be no robber”.16 The Court of Appeal in Ghosh dealt with
that issue in these terms:17
This objection misunderstands the nature of the subjective test. It is no defence for a man to say “I knew that what I was doing was generally regarded as dishonest; but I do not regard it as dishonest myself. Therefore I am not guilty.” What he is however entitled to say is “I did not know that
anybody would regard what I was doing as dishonest.” He may not be believed; just as he may not be believed if he sets up “a claim of right” under section 2(1) of the Theft Act 1968, or asserts that he believed in the truth of a misrepresentation under section 15 of the Act of 1968. But if he is believed, or raises a real doubt about the matter, the jury cannot be sure
that he was dishonest.
[54] That statement was approved by our Supreme Court in Hayes.18
[55] This issue was really Mr Ede’s principal defence. He said that he did not realise he was doing anything wrong because Mr Warburton had told him it was all right for him to sign the Aroha offer. This had been the constant theme
of his evidence. At that time, he did not realise, he said, that Mr Warburton was a shady solicitor; he said he believed he could rely on Mr Warburton in exactly the same way as he had relied for years on his normal solicitor, Mr Howden, a solicitor of very good standing. If the jury believed him in what he said Mr Warburton had said to him and believed him when he said he had relied on
Mr Warburton’s assurance that he could safely sign the Aroha offer, or if he raised a real doubt about those matters, then the jury might not be sure that he knowingly acted dishonestly.
[56] Mr Bonnar submitted that that defence was not put to the jury at all. We accept that submission. It is true, of course, that the Judge, particularly when
summarising the prosecutor’s final address, referred to what she had submitted was evidence which showed Mr Ede knew he should not have been selling the land to Aroha for only $220,000. But the Judge, when he was explaining the
“dishonestly and without claim of right” for “with intent to defraud”: see Crimes Consultative Committee Report on the Crimes Bill 1989 (1991) at 73. That Bill, although never enacted, and the Committee’s report provided the basis for the new Part 10 (Crimes against rights of property) introduced by the Crimes Amendment Act 2003.
14 At [41].
15 At [50].
16 Ghosh at 1064.
17 At 1064.
18 At footnote 17.
elements of the offence, never singled this out as an issue on which the jury would have to be satisfied beyond reasonable doubt. And he never set out that Mr Ede’s defence was his reliance on Mr Warburton’s advice.
We observe in passing that this defence would, of course, have been
much stronger had Mr Warburton been called to give evidence as to what he 5 had said to Mr Ede. Mr Ede had asked Mr Comeskey to brief Mr Warburton.
Mr Comeskey said that his junior counsel had spoken to Mr Warburton and had reported that Mr Warburton would not be “a suitable witness” to be called in Mr Ede’s defence. It appears, however, that no note was taken of what
Mr Warburton would have said. Perhaps it would have been unhelpful, but at 10 the least Mr Comeskey, given his instructions and given the importance of
Mr Warburton’s role in the defence, should have ensured that a brief of evidence was taken. Even if it was unhelpful, counsel and Mr Ede should have been aware of that.
Result 15 [58] The errors in the summing-up have caused a miscarriage of justice. Accordingly, we allow the appeal. We quash the conviction. We order a new
trial.
Appeal allowed; new trial ordered.
Solicitors for the Crown: Crown Law Offıce (Wellington). 20
Reported by: Steven Price, Barrister
2