Mailman v The Queen

[2005] NZCA 75

IN THE COURT OF APPEAL OF NEW ZEALAND

CA467/04

THE QUEEN

v

GARTH ALLEN MAILMAN

Hearing:13 April 2005

Court:McGrath, Williams and Panckhurst JJ

Counsel:M H McIvor for Appellant

K J Glubb for Crown

Judgment:27 April 2005 

JUDGMENT OF THE COURT

A.       THE APPEAL AGAINST CONVICTION IS DISMISSED.

B.       The appeal against sentence is dismissed.

____________________________________________________________________

REASONS

(Given by Williams J)

Issues

[1]       After trial in the Hamilton District Court the appellant, Mr Mailman, was convicted by a jury on three counts of using documents capable of being used to obtain a benefit for himself with intent to defraud.  The documents were three National Bank deposit forms, the amounts were $7400, $2309.50 and $4060 and the offences respectively occurred on 12 February, 16 April and 24 April 2003.  The jury was unable to agree on a fourth count alleging the same offence and the Crown has now decided not to re-try Mr Mailman on that charge.

[2]       Mr Mailman appeals to this Court against his conviction on the grounds, first, that the verdict was unreasonable and cannot be supported having regard to the evidence, secondly, that there was a miscarriage of justice through the extent and nature of the Judge’s interventions, and thirdly, because the Judge made factual mistakes in his summing-up.

[3]       Mr Mailman also appeals against reparation orders made against him as part of his sentence on the ground that, in the circumstances, they should not have been made.

Facts

[4]       The prosecution had its genesis in the relationship between Mr Mailman and a Ms Hayes and what occurred after the relationship ended.

[5]       The relationship began in about May 1997.  At that stage Ms Hayes was one of the two trustees of the N B Hayes Family Trust set up with money she had before the pair met. 

[6]       Towards the end of 1997 the couple incorporated a company called Effluent Spreading New Zealand Ltd (or Effluent Spreading NZ Ltd).  She was the sole director.  Mr Mailman was the sole shareholder.

[7]       The relationship came to an end in about mid-2002.  In between those times the company traded mostly at a loss but one year achieved a modest profit.  The house in which Ms Hayes lived with her family and which was owned by the Family Trust was mortgaged to provide working capital, plant and machinery and made other loans over the course of the company’s operation.  By the beginning of August 2002 the company owed the Trust about $145,000.  By that stage Ms Hayes and Mr Mailman were the trustees of the Family Trust.

[8]       After the relationship ended, using his powers as shareholder, Mr Mailman proposed to remove Ms Hayes as director of the company.  She was resistant to that course because of the amount owed to the Family Trust.  Accordingly, on legal advice, she prepared a statutory demand for the money owed to the N B Hayes Family Trust which she said she, as a trustee, served on herself as director of the company on 2 August 2002.  Accordingly, a company meeting called for that day which was, at least in part, to remove Ms Hayes as the company’s director, could not proceed since the company would become insolvent on expiry of the statutory demand.  It appears those present, however, discussed what was to occur and the meeting adjourned with Mr Mailman taking time to consider whether the company should be sold since Ms Hayes and Mr Mailman were unable to work together.  About a week later he telephoned the company accountant, Mr Reddy, and said he could not work with Ms Hayes.  The accountant confirmed that in all likelihood the business would be sold.

[9]       Ms Hayes advertised the company for sale.  The one offer was for less than the company’s total debts including that to the Family Trust.  Accordingly, after discussion with the accountant but not Mr Mailman, on 12 September 2002 the N B Hayes Family Trust offered to buy the company for $5000 more than the offer with the Trust accepting liability for the company’s external debt.  Ms Hayes said the Trust’s solicitor was instructed to prepare an agreement for sale and purchase and other documents but it appears they were never completed.

[10]     On 2 October 2002 Ms Hayes and Mr Reddy had what she described as a directors’ meeting.  She was still awaiting the documents including the incorporation of a new company.  She said it was her understanding that Mr Reddy was keeping Mr Mailman informed of developments.  His evidence did not bear that out.

[11]     Ms Hayes effectively settled the purchase on 30 September 2002 but her new company, Effluent Spreading NZ (2002) Ltd did not, it appears, commence business until 1 November.  Once in operation in the same business as the original company, it retained the same employees, used the machinery previously used by Effluent Spreading New Zealand Ltd and operated the same NZ Post box.

[12]     In early 2003 Ms Hayes noticed a reduction in the company’s mail.  She was expecting a cheque for $7400 from a customer who had promised immediate payment.  When it failed to arrive, she telephoned the customer to be told the cheque had been posted.  It was cancelled and a new one forwarded to her but when she rang NZ Post about her reduced mail, she discovered a redirection order had been lodged on the Post Office box on 3 February 2003.  Further inquiries showed the redirection order was lodged by Mr Mailman and directed mail to his address.  She cancelled the redirection order and had New Zealand Post, as she put it, “red lighted it so it wouldn’t happen again”.

[13]     That notwithstanding, about Easter 2003 she was expecting a GST refund.  It failed to arrive.  Company mail was again reducing.  Again her inquiries from NZ Post showed that on 1 April 2003 Mr Mailman had paid for a further redirection order on the company’s box again redirecting mail to him.

[14]     Inquiries showed the GST refund of $2309.50 and two other cheques totalling $4060 invoiced on 23 March and 14 April 2003 had not been received despite, Ms Hayes found, IRD and the customers having forwarded the cheques.  Payment was stopped and eventually she obtained payment though, in one customers’ case, she had to concede a discount of some $860 for costs and inconvenience the customer claimed to have suffered as a result of what had occurred.

[15]     When Mr Mailman was interviewed by Police he asserted he was the sole director and shareholder of Effluent Spreading New Zealand Ltd and he had redirected the mail because it was his company and he “wanted to see the status of the creditors”.  He spoke of a meeting set up for 21 October 2002 which Ms Hayes failed to attend but at which he was told she had taken possession of the company because of the debt owing to the Family Trust and thereafter “she was just doing what she liked” with the company’s machinery.  He said he did not expect to receive cheques after first redirecting the mail but when they arrived he opened an account in the name of Effluent Spreading NZ Ltd and banked them.  He accepted the cheques would have been sent in payment for work Ms Hayes’ company had conducted but said “the gear that did it was mine though” and the GST refund cheque arose because Ms Hayes had purchased a new tractor after selling that owned by the earlier company.

Submissions

[16]     For Mr Mailman, Mr McIvor said the verdicts were unsound as the jury should have concluded that there was clear evidence the appellant believed he still owned the company assets illegally sold to another entity and accordingly proof of intention to defraud was lacking.  He pointed to supporting evidence including Mr Mailman laying a complaint with the Police on 11 March 2003 about the use of Effluent Spreading New Zealand Ltd’s assets by Ms Hayes and evidence showing Ms Hayes unilaterally transferring the company car into her own name because Mr Mailman was using her personal vehicle.  There were the obvious difficulties over service of the statutory demand, the lack of proper documentation evidencing the sale of Effluent Spreading New Zealand Ltd’s assets to the Trust or to Effluent Spreading NZ (2002) Ltd, Ms Hayes acknowledgement she was removed as a director of the former company on 21 October 2003, the lack of reference to Mr Mailman as her then co-trustee in the N B Hayes Family Trust when, she said, the Trust agreed to buy the company’s assets and the lack of reference to Mr Mailman as sole shareholder of Effluent Spreading New Zealand Ltd of the sale of the company’s assets, that being a major transaction under the Companies Act 1993.  He also drew attention to evidence that the crediting of the cheques made out to Effluent Spreading NZ (2002) Ltd into an account for Effluent Spreading New Zealand Ltd was human error at the Bank.  All of that evidence, Mr McIvor submitted, made clear Mr Mailman acted in the belief that Effluent Spreading New Zealand Ltd’s assets had not been sold or legally sold either to the N B Hayes Family Trust or to Effluent Spreading NZ (2002) Ltd, Mr Mailman still owned and operated the former company and its assets and Ms Hayes was using assets to which she was not entitled.  All of that showed, Mr McIvor submitted, the jury should have concluded the Crown had failed to prove intention to defraud in relation to all counts.

[17]     In response, Mr Glubb submitted that Mr Mailman’s defence was fully put to the jury particularly through his Police statement.  Doubtless the jury considered all the evidence in reaching its verdict.  The verdicts were properly open.

[18]     We agree.  All matters were fully canvassed in evidence which included detailed cross-examination covering the topics raised in Mr McIvor’s submissions to us.  The jury had Mr Mailman’s Police statement.  There is no suggestion the directions and summing-up were inadequate on the various matters raised.  Although it appears the legal requirements for sale of the assets of Effluent Spreading New Zealand Ltd to the N B Hayes Family Trust or to Effluent Spreading NZ (2002) Ltd or both was never properly documented and the requirements of company and trustee law not fully observed, that was not the issue.  While, of course, it is impossible to know on what parts of the evidence the jury particularly relied, it seems likely it may have regarded Mr Mailman’s actions in early 2003 in placing the redirection orders diverting mail from the company’s box to himself and banking the cheques was sufficient in all the circumstances to prove an intention on his part to defraud.

[19]     We accordingly conclude that no ground has been made out to interfere with the jury’s verdict in this regard and order a new trial.

Judge’s Questioning Point

[20]     The nub of Mr McIvor’s submissions on this point was that the Judge intervened, principally in relation to Ms Hayes’s evidence, in a way and at such length as to have created sympathy in the minds of the jury for the witnesses.

[21]     It is sufficient to deal with the point to say that we have carefully re-read the evidence on which Mr McIvor relied in support of his submissions but find ourselves unable to draw from it the conclusion he urged.

[22]     As the précis earlier recounted will have demonstrated, this was a moderately complicated case involving the inter-relationship of a Family Trust with first, one, and later, two companies involving the claimed transfer of assets all set against the background of a failed personal relationship and its consequences.  Some at least of that may well have been beyond the experience of jurors.  The Judge’s questioning was largely as to matters of trust and company operation and security for advances.  That seems to us to have been designed to better inform the jury on those issues.

[23]     That ground of appeal is accordingly also rejected.

Factual Mistakes in Summing-Up

[24]     Mr McIvor submitted the Judge made material errors in his summing-up.  The first was when, in summarising the Crown case, he said the prosecution asserted Mr Mailman knew the detail of the claimed transfer of assets when that was not the Crown case.  The second suggested error was that, again in summarising the Crown case, the Judge said Mr Mailman transferred a vehicle from Effluent Spreading NZ (2002) Ltd back to Effluent Spreading New Zealand Ltd when the facts were that Mr Mailman transferred that vehicle from Ms Hayes’ name to the original company.  However, since that comment related to the count on which the jury was unable to agree that comment is not of great assistance to Mr Mailman.  The third suggested error concerned Mr Mailman’s statement that he believed he was entitled to the GST refund.

[25]     Consistently with those errors, Mr McIvor also submitted that in his sentencing remarks, the Judge demonstrated a bias against Mr Mailman which reflected the stance taken during trial.  All that needs to be said is that we have read the Judge’s remarks on sentencing.  While pointed in some respects, in our view they fall short of the construction which Mr McIvor would have us take from them in relation to the Judge’s views during trial.

[26]     Even if there were factual errors in the Judge’s summing-up, we note they related only to his summary of the Crown case so, in reflecting the stance the Judge said the Crown had taken, he may merely have been repeating errors by Crown counsel.

[27]     However, more importantly, the situation was entirely cured by the fact that when, at the conclusion of his summing-up, the Judge asked the routine question of counsel as to whether they sought additions to his directions, unusually he did so in the presence of the jury.  Before the jury, Mr McIvor took the opportunity of correcting the errors on which he now relies.  Having heard Mr McIvor’s corrections, the Judge repeated his direction to the jury that all factual matters were for their decision and also directed them to disregard any error of fact it may think he made.

[28]     In the circumstances of this matter, therefore, Mr Mailman had the advantage of any factual errors made by the Judge being identified, highlighted and corrected in the jury’s presence.  No point on appeal accordingly lies in that regard.

Sentence appeal

[29]     When sentencing Mr Mailman on 4 November 2004, the day after the jury’s verdicts, the Judge took a starting point of nine months imprisonment for each of the counts on which he had been convicted and reduced that to six months on each for delays in bringing the prosecution.  However, that term was ordered to be served cumulatively on a term Mr Mailman was then serving following his conviction on a charge of indecent assaulting a female under 12.

[30]     The Judge then imposed orders for reparation on Mr Mailman totalling $5860.  The $860 was the difference between the amount originally invoiced to one of Ms Hayes’s customers and the amount actually paid, as noted earlier.  The Judge concluded that the “discount was necessary as a matter of practical common sense resolution” (at [13]).  He went on to say that the reparation could be taken into account in any matrimonial property proceedings in the Family Court as a debt due by Mr Mailman to Ms Hayes.

[31]     The Judge then went on to deal with the balance of $5000 in the following way.

[14]     The next issue is the $5,000.00 that you obtained from the bank as a result of your fraud.  That is a sum that is both affordable and realistic to consider that someone being released from prison can meet, and it may be that it is something that, if there are any matrimonial or domestic property funds available to you, that could be met out of that amount.  You are ordered to pay $5,000.00 reparation to the National Bank at the rate of $20.00 per week with the first payment one month after your release date from prison.

[32]     While a sentence including reparation was open to the Judge, there was nothing to suggest he obtained a reparation report before imposing that sentence (Sentencing Act 2002 ss 33, 34) and the evidence does not disclose any detail of Mr Mailman’s financial capacity (s 35).  That is important given Mr Mailman’s position as a sentenced prisoner on 4 November 2004 and the fact that, even if there were Property Relationship proceedings on foot at the time of sentencing, it seems clear they were not close to conclusion.  Indeed, Mr McIvor advised that his understanding is that they have not been completed even now.

[33]     That notwithstanding, however, there was no statutory requirement for the Judge to obtain a reparation report and, because the amount the Bank had lost was clear, the Judge was entitled to take the view that he was “satisfied as to the amount of reparation that the offender should pay” (s 33(2)).  In those circumstances, we take the view that it is readily understandable that the Judge was concerned to deprive Mr Mailman of the fruits of his fraud by the very modest weekly payments he ordered and accordingly, though the Judge’s approach was robust, we see no error of principle in the reparation orders made.

Result

[34]     In the result, the appeals against conviction and sentence are both dismissed.

Solicitors:
Crown Law Office, Wellington