Han v The Queen
[2016] NZCA 395
•12 August 2016 at 2.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA62/2016 [2016] NZCA 395 |
| BETWEEN | WOOK HYUNG HAN |
| AND | THE QUEEN |
| Hearing: | 23 June 2016 |
Court: | Ellen France P, Mallon and Toogood JJ |
Counsel: | K J Patterson for Appellant |
Judgment: | 12 August 2016 at 2.30 pm |
JUDGMENT OF THE COURT
The appeal against conviction is dismissed.
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REASONS OF THE COURT
(Given by Ellen France P)
Introduction
The appellant was convicted after trial before a jury in the Auckland District Court of a representative charge of false accounting under s 260(a) of the Crimes Act 1961. He was sentenced by the trial Judge, Judge Mathers, to a six‑month term of home detention and 150 hours of community work.[1] The sentence has been completed. Mr Han appeals against conviction.
[1]R v Han [2015] NZDC 25523.
There is a single ground of appeal, namely, that there was insufficient evidence the invoices that formed the basis of the Crown case against the appellant were false.[2]
Background
[2]Another ground in the notice of appeal based on the Judge’s directions as to the definition of an invoice was not pursued.
General Travel New Zealand Ltd (General Travel) is an inbound tour operator and destination manager company. In 2009, the appellant entered into a joint venture arrangement with directors of General Travel under which package tours to New Zealand would be offered for the Korean tourist market. Under the joint venture the appellant, who is Korean by origin, would deal with a Korean company, Key World Tours (Key World). Key World, in turn, would sell New Zealand tours to other Korean tour agencies like Lotte Tour Travel Development Co Ltd (Lotte Tour).
As Peter Black, then managing director of General Travel, explained in his evidence, the Korean market produces shopping tours. Mr Black told the jury that shopping tours involve a New Zealand operator buying the tour at less than the total cost of the tour. The operator takes the chance of making up the difference between the price paid and the actual cost of the tour through shopping commissions. General Travel did not want to operate its business under that arrangement because of the view “many” companies operating that way had lost money.
Instead, the arrangement ultimately agreed with the appellant was that General Travel would receive the full tour cost of the package including a 10 per cent margin and GST. The company therefore would not carry any liability for shortfalls when it came to shopping commissions. The Memorandum of Understanding reflecting the arrangements between the appellant and General Travel was accordingly amended from an initial draft to delete a reference to the company’s expectation that shopping commissions would represent “a good percentage of … income” for the company.[3] It further recorded that the appellant and General Travel would make “earnest endeavours for open and transparent communication between each other and … not act unilaterally on any matter expressly disagreed upon by the other party”.
[3]A reference to the fact that shopping was “a component of all packages” was retained.
However, the appellant in fact followed the more traditional Korean model. As a result he charged Key World less than the tours cost and promised Key World seven per cent of the shopping commissions in the hope that the remaining shopping commissions would enable General Travel to return a profit.
Despite how he was operating, the appellant created invoices for each tour which recorded the sum owed by, say, Lotte Tour as the sum that would be owing if the terms of the memorandum of understanding had in fact been adhered to. That is, the invoice recorded a total cost (including GST) plus 10 per cent. These invoices were never sent to the Korean clients. Rather, the appellant applied the shopping commissions and tour fees he received as debts owed to General Travel. After a period of time, the amounts the appellant recouped in this way fell short of what General Travel believed it was owed.
Matters came to a head when Mr Black found a spreadsheet the appellant had prepared showing both the actual price charged for a tour and the higher price recorded in the invoice. Mr Black confronted the appellant. The appellant told Mr Black he had sold the tours at less than cost although when interviewed by the police he said he had invoiced the Korean companies for cost plus 10 per cent.
General Travel brought civil proceedings to recover their losses which the appellant did not defend and summary judgment was entered against him.[4] He was then charged of an offence under s 260(a). The single charge was a representative charge, the particulars (as amended at trial) of which read as follows:
That WOOK HYUNG HAN between 21 November 2009 and 29 June 2010, at Auckland, with intent to deceive General Travel New Zealand Limited, caused to be made false entries in documents, namely [168] travel invoices, used for accounting purposes.
[4]The judgment sum including interest and costs totalled over $632,000: General Travel New Zealand Ltd v Han HC Auckland CIV-2011-404-5565, 27 October 2011.
At trial the defence accepted the appellant had caused the invoices to be created and used for accounting purposes. However, the defence was that each invoice was a reflection of the full liability to be incurred by the off-shore operator, whether that was Lotte Tour or Key World or the others invoiced. As Mr Patterson put it in closing:
The invoices show the full cost of a tour which includes the cost of the tour, the actual costs, accommodation, rooms, meals and things like that, where they were paid for plus the margin that Mr Black wanted and he wanted 10 per cent we know from the first invoice … [and] it’s GST as well, clearly.
That defence was obviously rejected by the jury.
The law
Section 260 of the Crimes Act provides criminal liability for false accounting:
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—
(a)makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; …
There is no challenge to the Judge’s directions to the jury that to establish the charge the Crown had to prove the following four elements beyond reasonable doubt:
(a)That the dollar entries in the travel invoices were false.
(b)That Mr Han caused those false dollar entries to be made.
(c)The travel invoices were used for accounting purposes, and here there is no dispute about that.
(d)That when the false dollar entries were put on the travel invoices it was done to deceive General Travel New Zealand Ltd, and to deceive means to make a false representation which the maker knows to be false in the material particulars.
Insufficient evidence that invoice entries were false?
The point raised on appeal is a confined one, that is, whether there was sufficient evidence from which the jury could be sure the invoice entries were false.[5] The argument for the appellant is that the dollar sum on each invoice reflected the actual cost to the joint venture in organising each tour together with GST and the mark-up for profits. Further, Mr Patterson says:
The fact that the joint venture chose to bear the risk that the shop commissions would not fully reimburse the joint venture for the “invoiced” amount does not change this fact.
[5]The applicable principles are set out in R v Owen [2007] NZSC 102, [2008] 2 NZLR 37 at [12]–[15].
Mr Patterson also says it is wrong to ignore the fact the joint venture did not expect to make a profit for some months. He contends it is not possible to conclude the entry was false just because it reflected an element of anticipated profit that the business was not going to recover in its initial phase. Further, he points out that after the confrontation between the appellant and Mr Black the company continued to operate in the same way. The submission is therefore that there was no false entry, false accounting was not the appropriate charge, and the defence application made at the end of the Crown case to dismiss the charge under s 147 of the Criminal Procedure Act 2011 should have been successful. Finally, Mr Patterson accepted that the heart of the appellant’s case is that any deception is more appropriately dealt with as a civil dispute rather than through the criminal law.
We have some sympathy with the latter submission but this is not a matter going to the sufficiency of the evidence. The appellant was convicted of the charge that was brought and we consider there was sufficient evidence to prove that the invoices to which the charge related were false. That is because, to take Lotte Tour as an example, that company was not being charged the amount said to be owing on the invoice and would not be charged for that amount at a later date. The figure on the invoice was a false representation of what was owed to General Travel. Accordingly, the fact that the risk in the arrangement lay with General Travel was obscured. General Travel did not know that the difference between the invoice figure and the figure Key World or one of the operators understood would have to be paid would have to be made up by shopping commissions. The fact that it took a while before losses were incurred and the manner in which the company operated after matters came to a head are irrelevant for these purposes.
On this basis, we are satisfied there was sufficient evidence on which a jury could be satisfied that this element of the offence was met.
In the course of oral argument there was some discussion also about the sufficiency of the evidence of intention to deceive. Ms Ewing in her submissions said that the Crown relied on a number of factors some of which overlapped between that element and evidence as to the falsity of the entries. She referred, for example, to the fact that although the appellant was responsible for issuing the invoices, the appellant put his own email address on the invoices that were, of course, never sent. Had they been sent, it would have been to himself. Further, the appellant simply placed the invoices on the physical file and on two occasions he became angry when colleagues attempted to access the file. Finally, when Mr Black had it out with the appellant, the appellant admitted he had sold the tours at a lower rate. All of this was to be assessed against the background that the approach adopted by the appellant was in contradiction to the parties’ agreed arrangement as reflected in the Memorandum of Understanding.
Accordingly, there was evidence sufficient for the jury to infer that the deception was deliberate. It was a matter for the jury as to whether that evidence satisfied the elements of the representative charge.
Result
For these reasons, the appeal against conviction is dismissed.
Solicitors:
Public Defence Service, Auckland for Appellant
Crown Law Office, Wellington for Respondent
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