Mann v Wilson
[2024] NZCA 181
•28 May 2024 at 11.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA112/2023 [2024] NZCA 181 |
| BETWEEN | GARY DOUGLAS MANN |
| AND | DAVID NOEL WILSON |
| Hearing: | 5 March 2024 |
Court: | Ellis, Gault and Cull JJ |
Counsel: | D A Ewen and N A Mitskevitch for Appellant |
Judgment: | 28 May 2024 at 11.30 am |
JUDGMENT OF THE COURT
AThe appeal is allowed.
B The directions made by the High Court are quashed and the directions made in the District Court are reinstated.
CThe costs award made by the High Court is set aside.
D The first respondent must pay costs to the appellant for a standard appeal on a band A basis, with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Ellis J)
Table of contents
Para no
What happened?
The property
The Term Loan Agreement and the Security
The TLA and the security are assigned to WPA and a receiver is appointed
The attempt to injunct the sale
Subsequent events
The private prosecution
Statutory context
Narrative of the prosecution
The application for judicial review
The High Court decision
Amenability of s 26 decisions to review
Merits of the application for review: evidential sufficiency
Property
Possession or Control
Terms or circumstances giving rise to the relevant requirement
Knowledge of the requirement and intentional dealing
Overall conclusion on evidential sufficiency
Merits of the application for review: abuse of process
Issues on appeal
Abuse of process?
Was the High Court correct to decide that judicial review of the District Court decision was appropriate?
Was the evidence before the District Court sufficient to prove the elements of the charge to the prima facie standard?
Control over property
Circumstances requiring Mr Wilson to deal with the property in a certain way
Knowledge and intention
Conclusion on evidential sufficiency
Result
Mr Mann initiated a private prosecution against Mr Wilson, charging him with theft in a special relationship.[1] After some toing and froing, Judge Sainsbury in the District Court made a direction under s 26 of the Criminal Procedure Act 2011 (the CPA) that the charging document be accepted for filing.[2]
[1]Crimes Act 1961, s 220.
[2]Further Direction of Judge Sainsbury, DC Wellington, 23 May 2022.
Mr Wilson then sought judicial review of that decision in the High Court. Mr Mann chose not to participate in the High Court proceedings, abiding the Court’s decision. Mr Mann’s position was, instead, essentially advanced through Ms Markham, who had been appointed to act as contradictor.
In her decision of 31 January 2023, Gwyn J granted the application for review on the grounds both that the private prosecution was an abuse of process and that the proposed evidence was insufficient to support the charge.[3] She set aside the District Court decision and directed the Registrar of the District Court not to accept the charging document for filing. Later, she awarded 2B costs against Mr Mann.[4] We understand these to be in the vicinity of $30,000.
[3]Wilson v Wellington District Court [2023] NZHC 44 [Judgment under appeal].
[4]Wilson v Wellington District Court [2023] NZHC 1398.
Mr Mann now appeals the High Court decision.
What happened?
There is no real dispute about the key facts.
The property
Mr Mann ran a silo business from his home at 35 Port Underwood Road in Picton. Legal title to 35 Port Underwood Road is vested in the Marlborough District Council (MDC) but the leasehold estate was owned by Mr Mann’s company, Silo Solutions New Zealand Limited (Silo). The leasehold estate was purchased by Silo with the assistance of a loan of up to $410,000 from a private lender, Isso Holdings Limited (Isso).
The Term Loan Agreement and the Security
The terms and conditions of the loan from Isso were contained in a Term Loan Agreement (TLA). The TLA defined the “Property” as the leasehold interest in 35 Port Underwood Road and the “Security” as the documents listed in Schedule Two of the TLA and “any other agreements at any time entered into, delivered or intended to secure (directly or indirectly) the Borrower's obligations under this Agreement”. The documents listed in Schedule Two included personal guarantees from Mr Mann, his wife Sarah, the trustees of the Sadona Trust (Sarah Mann and Northern Trustee Services (No. 8) Limited) and from Mr Mann’s business partner, Philip Henderson.
As far as the guarantee given by Mr Henderson was concerned, Schedule Two went on to provide that it was “indirectly supported” by an executed agreement for sale and purchase (ASP) of the property between Silo (as vendor) and the trustees of the Fern Trust (as purchaser).[5] Clause 4(e) of the TLA required, as a condition precedent, that Isso had received the original copy of this ASP for an amount of no less than $475,000, inclusive of GST (if any). The ASP was also referred to in cl 9(l) of the TLA, whereby Silo and Mr Henderson covenanted that:
(i) upon an Event of Default occurring and at the option of the Lender, Philip William Henderson will procure the trustees of the Fern Trust, as soon as reasonably practicable and in any event within 15 Business Days of written notice from the Lender to do so, to complete the purchase from the Borrower of the Property in accordance with the Property Sale Agreement. The Borrower consents to, and will provide full co-operation in, this purchase being completed in this manner;
(ii) on the request of the Lender, at the Borrower’s cost, promptly execute and deliver to each other and/or the trustees of the Fern Trust (and to the Lender where applicable) all documents, and do anything else that the Lender deems appropriate in order to ensure the settlement of the Property; and
(iii) ensure that settlement proceeds are paid to the Lender to be applied in payment of the Outstanding Moneys, and the balance (if any) to be paid by the Lender to the Borrower.
[5]The Fern Trust was a trust of which Mr Henderson was a trustee.
Clause 10 of the TLA dealt with default. It provided that in the event of default (as then defined), the Lender (Isso) could (among other things) “exercise all or any of its rights under any Transaction Document and at law”. The definition of “Transaction Documents” in cl 1 included the TLA and the Security.
In summary, the TLA effectively provided that, on default, Isso could (at its option) call upon Mr Henderson to procure the other trustees of the Fern Trust to complete the purchase of the property for a price of $475,000 within 15 days. Silo was required to co-operate in that sale and the proceeds would be used to pay Isso the amount of the outstanding debt, with any balance payable back to Silo.
The TLA and the Security are assigned to WPA and a receiver is appointed
By late 2019, Mr Mann and Silo were both in financial difficulty. Silo fell into arrears on the loan from Isso. Mr Mann was facing bankruptcy. Mr Mann spoke with Mr Wilson about his difficulties. Mr Wilson was the owner of the adjoining property and the director and controlling mind of Wilson Property and Accounting Limited (WPA). Mr Mann says there was some discussion about Mr Wilson/WPA helping Silo out by purchasing the property, on the basis that Silo would be able to repurchase it in future.
But that is not what eventuated. Instead, on 17 December 2019, WPA approached Isso and obtained an assignment of the TLA and the related Security for the price of the outstanding loan balance of $222,430.71. On 23 December 2019, WPA issued a demand for payment of $14,506.49 to Silo. The demand triggered a default event under the terms of the TLA.
On 9 January 2020, WPA appointed Mr John Scutter as Silo’s receiver to recover the total debt due under the TLA, together with interest. There were other creditors. Mr Scutter took steps to sell the property under an open tender process.
The attempt to injunct the sale
On 8 April 2020, Mr Mann filed an application in the High Court for an injunction restraining Mr Scutter from taking steps to exercise any power to sell the property. The interlocutory application came before Cooke J and the application was set down for an inter partes hearing before him, a week later.
By the time of the hearing, seven tenders for the property had been received for the property, but none had yet been accepted. The highest was an offer of $370,000 made by Mr and Ms Wilson.
At the end of the hearing, Cooke J declined to stop the sale. At [11] of his subsequent reasons judgment, Cooke J noted that while the receiver had placed the property on the open market, “[w]hat is apparent is that Mr Wilson had wanted to acquire the property”.[6] He went on to refer to the receiver’s advice about the tenders received, saying:[7]
The receiver’s affidavit of 15 April 2020 explains that there were seven tenders, and that Mr and Mrs Wilson had submitted the highest tender offer at $370,000, and that a negotiation had taken place with the Wilsons involving a proposal that they pay the rates, rental and legal fees outstanding to the Marlborough District Council, which would take their tender value in excess of $390,000.
[6]Mann v Scutter [2020] NZHC 755 [Interim injunction application].
[7]At [11].
It is not necessary for present purposes to detail all the arguments advanced for Mr Mann and rejected by Cooke J in his judgment. It suffices to note that one of them was that Mr Wilson had breached s 25 of the Personal Property Securities Act 1999 (the PPSA) by:[8]
… taking unfair advantage of the company by obtaining information through the personal connection with Mr Mann and his son at a time when the company was vulnerable. It is said that Mr Wilson has engaged in a plan to acquire a neighbouring property with the result that Mr Mann is left personally exposed as a guarantor in circumstances where he and his family may become homeless at a time when there is uncertainty about finding another home.
[8]At [23].
Although Cooke J accepted that s 25 could be used to challenge the appointment of a receiver, he did not consider there was an arguable case for the application of the section in the circumstances before him. He referred to the decision Fatupaito v Harris in which, following a review of the authorities relating to the application of s 25 to enforcement action by a secured creditor, this Court held:[9]
[53] A mortgagee therefore need not have purity of purpose. But it does act in bad faith if, judged objectively, it acts for a predominant purpose which is collateral to, or to use the language of this Court in Lepionka, exogenous to, its interests as mortgagee in preserving its security and obtaining repayment of a secured debt. However a mortgagee does not act in bad faith if the effect of the exercise of its power undertaken for the predominant purpose of securing repayment is that it secures to itself some collateral advantage.
[9]Fatupaito v Harris [2018] NZCA 497, [2019] NZAR 192.
Then, Cooke J said:[10]
[25] There may be different perspectives of the acts taken by Mr Wilson here. Mr Mann may feel deceived by his neighbour. On the other hand Mr Wilson may feel he has saved Mr Mann from bankruptcy. But, in any event, Mr Wilson’s business strategy has been implemented through the technique of appointing a receiver, and the receiver has gone about his tasks in accordance with a receiver’s normal functions and duties. He has advised the property for sale on the open market by a tender process. Seven tenders were received. It would appear that the highest tenderer was Mr Wilson. This may mean that Mr Wilson has proceeded in a manner that has meant that he has secured a collateral advantage — he has obtained ownership of the next door property that he wished to own. But this has been also done in a way that apparently preserves a sale at market value through the use of an independent third party acting as receiver. Accordingly I do not accept Mr LaHatte’s arguments.
[10]Interim injunction application, above n 6.
And in his concluding comments, he said:
[28] The collapse of the business has unfolded in a different way than expected. This is a consequence of Mr Mann’s neighbour spotting an opportunity to acquire the next door property. But Mr Wilson did not cause the collapse, and he has taken on his own business risks in the steps that he has taken. There is no basis to prevent him from enforcing the legal rights that he has paid to acquire. Such rights could equally have been exercised by Isso itself had it wished to take enforcement action.
[29] It is obviously a concern that Mr Mann and his family may lose their family home. But as I said when dismissing the application, at this stage I am only dealing with the application for an injunction. I particularly note the receiver’s affidavit sworn 15 April 2020 which refers to the proceedings before the Tenancy Tribunal in relation to Mr Mann’s occupation of the property, and which also states:
I confirm that the successful tenderer or I are required to give 42 days’ notice to the Mann’s to vacate the premises once the lockdown is lifted and the government restrictions moved to level 2 or below.
[30] This will give the Mann’s some breathing space, and it is also apparent that further legal processes will be involved in any eviction.
It is apparent that, for whatever reason, Cooke J’s attention was not drawn to the fact that, included in the Security that had been assigned to WPA and so, included in the Security available to the receiver, was the option of activating the ASP between Silo and the Fern Trust. Activating this option would have yielded a sale price of $475,000 — some $105,000 more than the price offered by Mr Wilson.
Subsequent events
On 29 May 2020, Mr Henderson emailed Mr Scutter, attaching a letter on behalf of the Fern Trust, confirming the ASP could and should be actioned and that he was ready, willing and able to complete the purchase through the Fern Trust.
Mr Scutter responded on 9 June 2020, saying:
I draw your attention to the first line of clause 9.1(1)(1), that states “upon an Event of Default occurring and at the option of the Lender ...” The Lender has the option to enforce the Property Sale Agreement, it is at their discretion.
The Lender, now being Wilson Property and Accounting Limited, has not provided me with instructions to enforce this option and has elected to have the leasehold interest sold via open market tender.
I can confirm that I have accepted an offer for the purchase of the leasehold interest and that the agreement is unconditional.
I therefore confirm to you that the Property Sale Agreement option has not been exercised and will not be called upon by the Lender. This brings this matter to an end.
The sale of the property to WPA settled in June 2020. Because Silo had other creditors, and because of the costs incurred by the receiver the sale price left a shortfall in terms of the amount owing by Silo of $72,548.76. The guarantors under the TLA therefore remained exposed in that amount.
The private prosecution
Statutory context
Before embarking on the narrative of Mr Mann’s attempt then to privately prosecute Mr Wilson, it is useful to note the relevant statutory provisions.
Section 220 of the Crimes Act 1961 provides:
220 Theft by person in special relationship
(1)This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a)to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3) This section applies whether or not the person was required to deliver over the identical property received or in the person’s possession or control.
(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.
Section 15 of the CPA provides that any person may commence a prosecution. But where a prosecution is sought to be commenced by a private individual, s 26 of the CPA confers on the District Court a gatekeeping role. It provides:
26Private Prosecutions
(1) If a person who is proposing to commence a private prosecution seeks to file a charging document, the Registrar may—
(a) accept the charging document for filing; or
(b) refer the matter to a District Court Judge for a direction that the person proposing to commence the proceeding file formal statements, and the exhibits referred to in those statements, that form the evidence that the person proposes to call at trial or such part of that evidence that the person considers is sufficient to justify a trial.
(2) The Registrar must refer formal statements and exhibits that are filed in accordance with subsection (1)(b) to a District Court Judge, who must determine whether the charging document should be accepted for filing.
(3) A Judge may issue a direction that a charging document must not be accepted for filing if he or she considers that—
(a) the evidence provided by the proposed private prosecutor in accordance with subsection (1)(b) is insufficient to justify a trial; or
(b) the proposed prosecution is otherwise an abuse of process.
(4) If the Judge determines under subsection (2) that the charging document should not be accepted for filing, the Registrar must—
(a) notify the proposed private prosecutor that the charging document will not be accepted for filing; and
(b) retain a copy of the proposed charging document.
(5) Nothing in this section limits the power of a Registrar to refuse to accept a charging document for want of form.
The required contents of a charging document are dealt with in ss 16 and 17 of the CPA and r 3.1 of the Criminal Procedure Rules 2012.
Narrative of the prosecution
Mr Mann took steps to file a charging document in the Wellington District Court in late 2021. The document named Mr Mann as the informant, Mr Wilson as the defendant and the prosecutor as “New Zealand Commercial Law Corp Ltd —David Hayes, Barrister”. Under the heading “offence details” it stated:
I, Gary Douglas Mann, have good cause to suspect that David Noel Wilson has committed the offence specified below.
Date of offence: On or before 15 June 2020.
Offence Location: At Picton.
Offence description: The Defendant aided and abetted Wilson Property and Accounting Ltd (WPA), when WPA was is [sic] in control of property, in circumstances where WPA was required to deal with the property in accordance with the requirements of other persons; and failed to do so.
Particulars
a) The Defendant, David Noel Wilson is the sole director and controlling mind of WPA.
b) The “property” was a sale and purchase agreement of leasehold land and buildings owned by Silo Solutions New Zealand Ltd, (“Picton”), with a known value of $475,000.
c) WPA purchased a loan to Silo Solutions New Zealand Ltd, (the loan), that was secured by the property.
d) WPA sought to recover the loan; and in the process WPA failed to recover the $475,000 available from the property that was intended to repay the loan.
e) WPA intentionally failed to deal with the property in accordance with the requirements of other persons, - to recover the $475,000 available from the property to recover the best price reasonably obtainable for Picton.
f) The Defendant and his wife Lesley Helen Wilson purchased Picton for $370,000, in circumstances where had WPA dealt with the property as required by other persons, Picton would have realised $475,000.
g) Silo Solutions New Zealand Ltd suffered a loss of $105,000; and other persons (guarantors) that required WPA to deal with the property in accordance with their requirements, also suffered loss.
Legislative Reference: Sections 66 and 220 of the Crimes Act 1961.[11]
[11]Section 66 of the Crimes Act deals with the question of parties. As we understand it, its inclusion in the charging document seems to reflect a contention that Mr Wilson aided and abetted WPA in the commission of the offence.
The charging document was accompanied by a summary of facts, statements from Mr Mann and Mr Henderson, a bundle of “disclosure” and submissions from Mr Hayes.
The Registrar did not immediately accept the charging document for filing, but rather referred it to a District Court Judge (Judge Sainsbury) under s 26(1)(b).
On 13 December 2021 Judge Sainsbury issued a direction expressing concern about evidential sufficiency. More particularly, after referring to the formal statements and exhibits filed and commending Mr Mann on his “comprehensive and organised evidence” he said:[12]
[5] I do, however, have concern about the evidential sufficiency of those exhibits. One specific concern is that I do not see how the claimed special relationship under s 176 of the Property Law Act 2007 can have arisen, when the sale was exercised not by the mortgagee, but by the receiver. Therefore, the duty to obtain a reasonable price would have, in my preliminary assessment, arisen under s 19 of the Receiverships Act 1993 and be binding not on the proposed defendant, but the receiver himself.
[6] Without that duty, there can be no special relationship, which is, of course, a critical ingredient in the charge of theft in a special relationship.
[12]Direction of Judge Sainsbury, DC Wellington, 13 December 2021.
The Judge directed Mr Mann to file any further statements (together with accompanying exhibits) that Mr Mann proposed to call at trial.
Mr Hayes then filed further submissions dated 23 December 2021, and a second bundle of “Further Disclosure”.
On 23 May 2022, Judge Sainsbury directed that the charge be accepted for filing, giving quite detailed reasons for doing so.[13] He referred to the decision in Tallentire v R, where this Court confirmed that there were four questions that required a positive (beyond reasonable doubt) answer, in order to prove a charge under s 220:[14]
(a) Did the accused have control over property?
(b) Was the property in the control of the accused, in circumstances that required him to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person?
(c) Did the accused know of those circumstances? And,
(d) Did the accused intentionally deal with the property, or any proceeds of the property, otherwise than in accordance with those requirements?
[13]Further direction of Judge Sainsbury, above n 2.
[14]Tallentire v R [2012] NZCA 610, [2013] 1 NZLR 548 at [51] and [67].
After summarising the facts as alleged by Mr Mann, the Judge then turned to consider whether they could enable the four Tallentire questions to be answered positively. We set out his analysis in full:[15]
[15]Further direction of Judge Sainsbury, above n 2. Footnotes omitted.
(i) Did the defendant have control over property?
[19] Mr Mann identifies that the “property” for the purpose of s 220 of the Act was the sale and purchase agreement. The sale and purchase agreement was used as security for the loan, originally between SSL and ISSO. When ISSO assigned the loan to WPA, that included the ability to use the sale and purchase agreement to obtain repayment of the outstanding debt from Fern. Accordingly, WPA was in possession or control of the “property”.
[20] The Supreme Court determined in Cullen v R that criminal conduct of a company can be attributed to a sole director in some circumstances. In this instance Mr Wilson was the sole director and a shareholder of WPA. I consider that provides evidence by which Mr Wilson can be said to have had control over the “property”.
(ii) Was the property in the control of the defendant, in circumstances that required him to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person?
[21] The argument of the proposed prosecutor is that in the circumstances set out, Mr Wilson, [through] WPA, was in a special relationship with the guarantors of the loan, including Mr Mann. That special relationship placed fiduciary obligations on Mr Wilson to choose the option that recovered the debt but did not disadvantage the guarantors. It meant he had an obligation to use the sale and purchase agreement to recover the money owing following the default. This is said to arise in a number of ways.
[22] First, the circumstances surrounding WPA acquiring the loan meant that it had a fiduciary relationship with SSL and Mr Mann. Because of that, it was obliged to rectify the default in a way that did not cause unreasonable harm to SSL and Mr Mann. In other words, it should have obtained repayment using the sale and purchase agreement. The option of Mr Wilson appointing a receiver and then directing that receiver to sell the property to him and his wife at an undervalue, at least when compared to what was available under the sale and purchase agreement, was a breach of that fiduciary duty.
[23] Second, while the use of the sale and purchase agreement as security is expressed as able to be exercised “at the option of the lender”, when the sale and purchase agreement is properly construed that option is fettered by an obligation to protect the interests of SSL and Mr Mann. This means the option could not be disregarded so as to allow the lender to sell at an undervalue, especially to himself. Of course, if the market was such that the property could be sold for an amount greater than $475,000, the “option” meant the lender was not constrained to use the sale and purchase agreement to sell at an amount less than market. In other words, the loan when properly interpreted did not provide an unfettered discretion to the lender. In the circumstances that have been set out, Mr Wilson was obliged to deal with the property by using the sale and purchase agreement, once Fern had made it clear that it was ready, willing, and able to settle under the sale and purchase agreement.
[24] Third, insofar as the loan constitutes a mortgage there is a legal obligation under the Property Law Act to obtain the best price reasonably obtainable. The sale and purchase agreement ensured that the sum of $475,000 would be paid. That is significantly greater than the $370,000 for which the property was eventually sold. Further by utilising the sale and purchase agreement there was no need to appoint a receiver thereby saving just under $120,000 in fees and expenses.
[25] Fourth, Mr Wilson directing that the liquidator refuse to use the sale and purchase agreement, created a clog on the equity of redemption. Fern had an interest in redeeming the loan and acquiring the property. Mr Wilson [was] not acting in good faith by directing that the liquidator not to use the sale and purchase agreement but rather sell to Mr Wilson and his wife for a significantly lesser sum.
[26] I have reservations about each of the arguments advanced. However, as mentioned above, it is not the role of the screening process to conduct an imaginary trial or to conduct exhaustive or complicated legal research as to the underlying legal position. My role [is] to determine whether the evidence makes out on a prima facie basis that the elements can be made out.
[27] I am conscious that Mr Wilson may have significantly different views on the facts set out and there may be further information available that throws a different light on these events. Once the charge is laid there is provision in the Criminal Procedure Act for legal issues that go to the heart of a case to be resolved short of trial. That can be done with the filing of considered submissions on the issues and there being an interlocutory hearing where counsel can properly argue the respective positions.
[28] I observe that even if it was established that Mr Wilson acted in the way alleged, about which I hasten to note I have only heard one side of the story, it does not mean that he has fallen foul of the criminal law. The allegation by Mr Mann, is that Mr Wilson has learned of his neighbour’s financial difficulty. He has feigned sympathy and made an offer of assistance that he had no intention of carrying out. Rather, he has taken advantage of the situation in order to purchase his neighbour’s home at an undervalue and at considerable financial disadvantage to his neighbour. Even if all that was true, and I again emphasise I have not heard all the evidence available in this case and make no finding or insinuation that it is true, it may be that it is morally repugnant, rapacious and unethical but it might not be criminal.
[29] The gatekeeping process I am going through does not get me to the position of being able to give a definitive answer on the legal issues raised under this element of the charge. But, nor are the issues raised clearly wrong or able to be disregarded as unmeritorious. The evidence may not establish that Mr Wilson was required to deal with the property in accordance with the requirements of Mr Mann, but what it does establish is that he may have been required to do so. I conclude that under the s 26 procedure, and in the context of this particular offence, that this is sufficient to make out the ground to the required standard.
[30] While I am not convinced as to the likelihood of success, that is not the question that is required to be answered. It seems to me that to progress this allegation any further, a full argument may need to be presented from either side. Only then will a Judge, better appraised of the entirety of the situation, be able to determine whether there is a case to answer. As noted, if the proposed defendant feels that that there is not, the procedure in s 147 of the Criminal Procedure Act is available to him.
(iii) Did the defendant know of those circumstances and (iv) Did the defendant intentionally deal with the property, or any proceeds of the property, otherwise than in accordance with those requirements?
[31] Intention has been discussed in Tallentire, where the Court held that there are two parts to the mens rea. The first is that there must be knowledge of the requirement to deal with the property in a certain manner, the second is that the decision not to do so must have been intentional.
[32] The evidence is such that it is possible to make out that Mr Wilson was aware of the circumstances that I have laid out above. If they are such as to give rise to the requisite requirement, then I am satisfied that the element of knowledge can be met.
[33] As Mr Wilson was aware of the sale and purchase agreement, and he was aware of the offer by Mr Henderson to execute the existing sale and purchase agreement, any decision to do so can reasonably be inferred to have been intentional. The question must therefore be whether the “option” to do so was instead a requirement.
Although (as is evident from the above) the Judge had reservations about the charge, he concluded the test for acceptance for filing had been met and that there was “not anything in the circumstances that marks this out as an abuse of process”.[16] He directed that the charging document be accepted for filing and that the private prosecution could proceed.
The application for judicial review
[16]At [34].
There is no right of appeal from a decision to accept a charging document for filing under s 26. Mr Wilson therefore sought to review the decision in the High Court.
The statement of claim referred to Mr Mann’s injunction application and to Cooke J’s decision, pleading as a particular that: “[t]his decision was reached on the basis that (inter alia) the plaintiff had acted in accordance with his ‘legal rights’”. The specific grounds for review articulated were that:
(a)the material filed in the District Court in support of the prosecution were not capable of establishing offending under s 220 (for reasons articulated in the pleading) and so the charging document should have been rejected for filing under s 26(3)(a);
(b)Cooke J’s finding (in the interim injunction proceeding) that there was “no basis” for preventing Mr Wilson from doing what he did was a binding legal determination that Mr Wilson was not required to account to Mr Mann in terms of s 220; and
(c)the private prosecution was a collateral attack on Cooke J’s decision making it an abuse of process that should properly have been rejected for filing under s 26(3)(b).
As noted earlier, Mr Mann chose to take no part in the judicial review proceedings, the District Court abided in the usual way and Ms Markham was appointed to act as contradictor.
The High Court decision
We attempt to summarise the key findings in the High Court in the order in which they appear in the judgment under appeal.
Amenability of s 26 decisions to review
After setting out the background, the High Court Judge first considered whether the District Court Judge’s decision was amenable to judicial review. After referring to the line of cases endorsing a “hands off” approach, she accepted that a distinction could be drawn between judicial review of the exercise of prosecutorial discretion by the Crown and review of a private prosecution.[17] She noted the 1997 statement by the Law Commission that “[t]he decision to begin a prosecution against an individual has profound consequences”[18] and the statement by the Supreme Court in S (SC 58/2019) v Vector that:[19]
… the availability of the private prosecution mechanism serves an important purpose. But it is equally clear that private prosecutions allow non-state entities or individuals to … deploy “the power and machinery of the State to enforce criminal law and penalise criminal wrongdoing”.
[17]Judgment under appeal, above n 3, at [47].
[18]Law Commission Criminal Prosecution (NZLC PP28, 1997) at 151.
[19]S (SC 58/2019) v Vector [2020] NZSC 97, [2021] 1 NZLR 1 at [127]. Footnotes omitted.
The Judge rejected Ms Markham’s submission that s 147 of the CPA would, in most cases, provide the appropriate remedy, saying:[20]
[48] I accept that it is no answer to inappropriate private prosecutions to say the defendant can apply under s 147 of the CPA. In order to access s 147 the individual has to have become a defendant. That is, he or she has become part of the criminal justice process and is already potentially subject to the “profound consequences” to which the Law Commission referred.
Merits of the application for review: evidential sufficiency
[20]Judgment under appeal, above n 3.
In terms of the first limb of s 26(3) (sufficient evidence to justify a trial), the Judge noted the test articulated by the Supreme Court in Vector, namely that “the threshold for determining evidential sufficiency is whether, on a prima facie basis, the evidence is sufficient to prove the elements of the charge to the required standard”.[21] She acknowledged the District Court Judge had applied that test.
[21]S (SC 58/2019) v Vector, above n 19, at [6].
Next, she referred to the terms of s 220 and the decision in Tallentire. Again, she acknowledged the District Court Judge had used the four Tallentire elements as the basis for his analysis but then turned to consider each of them herself.
Property
The Judge began by noting that the “property” referred to in the charging document was the ASP. She then referred to s 218 of the Crimes Act, which provides:
218Matters of ownership
(1) For the purposes of this Part, a person is to be regarded as the owner of any property that is stolen if, at the time of the theft, that person has —
(a) possession or control of the property; or
(b) any interest in the property; or
(c) the right to take possession or control of the property.
(2) An owner of any property may be guilty of theft against another owner of that property.
…
After recording a number of arguments advanced on Mr Wilson’s behalf about why the ASP could not be the relevant “property” in terms of the charge, the Judge concluded:
[67] There is a disjunct between what the charging document and supporting documents say about what comprises the “property”. Although the charging document records the Sale and Purchase Agreement as being the relevant “property”, in substance, Mr Mann’s case is that the “property” is the right provided to WPA by cl 9(1)(l) of the Term Loan Agreement, to call upon Mr Henderson to procure completion of the conditional Sale and Purchase Agreement for the leasehold of the Property. The essence of the claim is that WPA was under an obligation to exercise that right and deal with that “property” in a particular way.
Possession or Control
The Judge observed that the difficulties she had identified in terms of the relevant “property” became more acute when it came to consider the question of control, because WPA was not a party to the ASP, had no rights under it and no control over it. Rather, WPA’s rights arose under the TLA which gave it an option rather than an obligation to require that the ASP be performed. Moreover, because the consent of the MDC (as owner of the freehold) was required before the property could be sold, she doubted that even WPA or Mr Wilson had the requisite control over the ASP.
Terms or circumstances giving rise to the relevant requirement
Given her conclusions on “property” and “control”, the Judge observed that there was a certain artificiality in going on to consider the third and fourth Tallentire elements. Nonetheless, she noted:[22]
[93] The essence of the charge is that WPA/Mr Wilson were “required” to exercise the right under cl 9(1)(l) of the Term Loan Agreement and call on Mr Henderson and Silo to complete the sale. As the prosecutor submitted in the District Court, the words of cl 9(1)(l) – “at the option of the lender” – must be construed as being fettered by an obligation to protect the interests of Silo and Mr Mann.
[22]Judgment under appeal, above n 3. Footnote omitted.
The Judge was not prepared to accept that such an obligation could exist, because, as the charging documents themselves acknowledged, the TLA only gave WPA an option. She noted the summary of facts filed by the prosecutor did not identify any “requirement” and accepted the submission made on behalf of Mr Wilson that an option could not be equated with an obligation or requirement.
Knowledge of the requirement and intentional dealing
The Judge began this aspect of her analysis by noting that:[23]
The thrust of the charge is that WPA/Mr Wilson had an equitable obligation to call on that security before taking further steps. It was that obligation that WPA/Mr Wilson must have been aware of for the purpose of s 220.
[23]At [101].
Then, she recorded the submission made by counsel for Mr Wilson that:[24]
… even if Mr Wilson were fixed with knowledge of some requirement to act in the best interests of Silo (or its personal guarantors) he cannot be shown to have intentionally breached that requirement, or any specific requirement to allow the Fern Trust to purchase the leasehold estate, given that the Fern Trust itself had the opportunity to tender for the leasehold interest on the receivership sale at whatever price it considered appropriate.
[24]At [102].
The Judge said it was insufficient that WPA/Mr Wilson might merely know of the relevant circumstances, because it is not possible to “intentionally” disregard a requirement that is not known. There was no express requirement here to deal with the property in a particular way and although it was possible for the general law to give rise to such a requirement, Cooke J’s decision was relevant to that here. After referring to the passages from his judgment we have set out above, the Judge noted that Cooke J had “affirmed Mr Wilson’s right, through the receiver, to exercise the power of sale of the Property”.[25] The Judge concluded that “there is insufficient evidence for the prosecutor to establish on a prima facie basis that WPA/Mr Wilson were aware of a specific obligation to act in accordance with the interests of Mr Mann and Silo”.[26]
Overall conclusion on evidential sufficiency
[25]At [110].
[26]At [111].
The Judge began her concluding comments by noting various submissions advanced by Ms Markham. Then, she said:[27]
[116] However, even taking the prosecutor’s case at its highest and accepting that Mr Wilson engaged in sharp practice, or was dishonest in a lay sense, that is not in itself sufficient to meet the requirements of s 220. As Judge Sainsbury said, “it may be that [Mr Wilson’s conduct] is morally repugnant, rapacious and unethical but it might not be criminal.”
[27]Footnote omitted.
After noting Judge Sainsbury’s observations at [29] of his directions (set out at [36] above), the Judge recorded her agreement with him that “the process of analysis of each element of the s 220 offence does not enable a definitive answer on the legal issues raised”.[28] But, she said:[29]
… unlike Judge Sainsbury, I conclude that the difficulties inherent in all elements of the offence mean that, having regard to the cumulative effect, it is simply not possible for Mr Wilson, or this Court, to be able to “readily recognise the nature and scope” of the obligation.
[28]At [118].
[29]At [118].
The Judge acknowledged that Mr Mann had reason to feel aggrieved about Mr Wilson’s conduct and that it was possible that he might have a civil claim available to him. She concluded that “on a prima facie basis, the evidence advanced is not sufficient to prove the elements of the s 220 charge to the required standard”.[30]
Merits of the application for review: abuse of process
[30]At [120].
Although not strictly necessary to do so, the Judge went on to consider whether the charging document was also an abuse of process and should not have been accepted for filing on that basis. The core submission made by Mr Wilson on that point was that Mr Mann had failed to disclose Cooke J’s decision, and his “finding” that WPA was acting entirely in accordance with its legal rights, to the District Court.
The Judge then reviewed a number of authorities, and the submissions made on behalf of Mr Wilson, which included reference to the contents of the affidavits that had been filed in the interim injunction proceeding. She said:
[141] In his direction of 13 December 2021 Judge Sainsbury highlighted that he had concerns about the evidential sufficiency of the material filed by the prosecutor up to that point. The Judge noted “one specific concern is that I do not see how the claimed special relationship under s 176 of the Property Law Act 2007 can have arisen, when the sale was exercised not by the mortgagee, but by the receiver. Therefore, the duty to obtain a reasonable price would have, in my preliminary assessment, arisen under s 19 of the Receiverships Act 1993 and be binding not on the proposed defendant, but the receiver himself.”
[142] Following that direction the prosecutor filed statements dated 14 October 2021 from both Mr Mann and Mr Henderson. Counsel for the proposed prosecutor also filed submissions on 14 October 2021. None of those documents referred to Cooke J’s judgment of 17 April 2020 on Mr Mann’s application for an interim injunction to prevent the receiver proceeding with the sale of the Property.
[143] In those circumstances there was no reason for the Judge to believe that the proposed prosecution was an abuse of process.
[144] However, the injunction judgment was plainly relevant – particularly in light of the reservation that Judge Sainsbury had expressed and his request for further evidence and the almost complete overlap in the substance of the two cases. At their core, both concern Mr Mann’s allegation that Mr Wilson had taken unfair advantage of him and Silo. The judgment would no doubt have informed Judge Sainsbury’s ultimate s 26 decision.
[145] Further, the prosecution does, at least in part, attempt to replicate the argument that was heard before Cooke J.
The Judge acknowledged that while it would not ordinarily be appropriate on an application for judicial review to consider evidence that was not before the decision maker, the existence and content of Cooke J’s judgment was “highly relevant information”.[31] She said “there can be no other conclusion than that it was deliberately withheld from the Judge” and, for that reason, she would consider it.[32] She concluded that “proceeding with the prosecution, in the absence of advice to Judge Sainsbury about the fact and result of the interim injunction application, was an abuse of process”.[33]
Issues on appeal
[31]At [146].
[32]At [146].
[33]At [147].
Before the hearing of this appeal, counsel agreed a list of issues, which is admirably brief and serves as a framework for the remainder of this judgment. The agreed issues are:
1. Was the proposed prosecution an abuse of process under s 26(3)(b), Criminal Procedure Act 2011?
2. If no to 1., was the High Court correct to decide that judicial review of the District Court decision was appropriate?
3. For the purposes of s 26(3)(a), Criminal Procedure Act 2011, was the evidence before the District Court sufficient to prove the elements of the charge to the prima facie standard so as to justify a trial?
Abuse of process?
It is clear from the High Court judgment that the Judge was persuaded by the argument advanced by Mr Wilson that the private prosecution was an abuse of process both because it constituted a collateral attack on Cooke J’s decision and because the existence of that decision was not disclosed to the District Court Judge.
While we agree that it would have been preferable and prudent for Mr Mann/Mr Hayes to have disclosed the existence of the judgment to the District Court Judge, we are unable to agree that the failure to do so was an abuse of process. For related reasons, we are also not able to view the private prosecution as a collateral attack on that decision.
The fundamental point — and one made by Cooke J himself — is that his judgment was an interim one; it made no final determination of anything that is material to the matters now at hand. He was simply not persuaded, based on the quite limited (and no doubt hastily prepared) material before him, that Mr Mann had an arguable case that s 25 of the PPSA applied. Moreover (and as we have said, for reasons that are unclear to us), Cooke J was not made aware of the ASP option which, at least arguably, was of some moment, because it bore on (at least) the receiver’s obligation to obtain the best price for the property.
If Cooke J’s judgment made no final determination of anything other than the application for the interim injunction itself, then:
(a)it cannot be said that it determined in any binding way that Mr Wilson/WPA/the receiver had a right to proceed as they did; and
(b)the proposed private prosecution cannot be seen a collateral attack on it.
So, we are unable to agree with the High Court Judge that there was an abuse of process here.
Was the High Court correct to decide that judicial review of the District Court decision was appropriate?
We begin with some matters of general principle.
First, an application for review of the exercise of the s 26 gatekeeper function is an application for review of a decision made in the exercise of the District Court’s criminal jurisdiction. The potential for such applications to delay and derail the orderly and efficient conduct of criminal trials is real, as can be seen from this and other similar cases. It is now over two years since Mr Mann first attempted to bring his prosecution. The right to be tried without undue delay, as confirmed by s 25(b) of the New Zealand Bill of Rights Act 1990, does not take a back seat because the prosecution is a private one.
Relatedly, there can be little doubt that the s 26 gatekeeping process was, itself, intended to be a quick and straightforward one. As was made clear by the Supreme Court in S (SC 58/2019) v Vector Ltd:[34]
(a)the ability to bring a private prosecution is constitutionally important;[35]
(b)section 26 is intended to operate as a preliminary and uncomplicated screening mechanism, in which the scope of the enquiry and the material considered will usually be confined, and the exercise generally undertaken on the papers;[36]
(c)it is not good practice to give proposed defendants the opportunity to file material and make submissions as a matter of course, although the Judge retains a discretion (exercisable in the interests of justice) to consider material going beyond that of the proposed prosecutor;[37]
(d)the threshold for determining evidential sufficiency is whether, on a prima facie basis, the evidence is sufficient to prove the elements of the charge to the required standard;[38] and
(e)unlike prosecutions commenced by the State, wider considerations involving the public interest are not relevant.[39]
[34]S (SC 58/2019) v Vector Ltd, above n 19.
[35]At [40]–[47] per O’Regan and Ellen France JJ, and [127] per Winkelmann CJ and Williams J.
[36]At [47]–[66] and [89] per O’Regan and Ellen France JJ, [106] per Glazebrook J and [129] per Winkelmann CJ and Williams J.
[37]At [74] per O’Regan and Ellen France JJ, [107] per Glazebrook J and [134] per Winkelmann CJ and Williams J.
[38]At [85] and [91] per O’Regan and Ellen France JJ, [106] per Glazebrook J and [121] and [125] per Winkelmann CJ and Williams J.
[39]At [75]–[76] per O’Regan and Ellen France JJ and [114] per Winkelmann CJ and Williams J.
The absence of appeal rights from s 26 decisions, the absence of any requirement for a hearing, the availability of other avenues of appeal during the criminal process (both pre and post-trial) and the separate statutory pathways for challenging unmeritorious prosecutions (such as an application to have a charge dismissed under s 147 of the CPA) not only underlie these observations, but are also separately relevant. So too with the statutory powers to amend or substitute a charge throughout the proceeding, including on the court’s own motion.
While all these things underscore the need for restraint, they do not render review of decisions under s 26 not justiciable. Rather, they potentially bear on both the scope and standard (or intensity) of review and the availability and scope of relief.[40] So, judicial review will be appropriate only in relatively rare cases.[41] As this Court said in C v Wellington District Court:[42]
As a matter of general principle truly exceptional circumstances will be required for the Court to entertain an application for judicial review of a decision to commit for trial under s 168 of the Summary Proceedings Act 1957 where the sole ground is a challenge to the sufficiency of the evidence. That principle should apply even if an identifiable question of law (other than sufficiency of evidence) is said to arise. The Crimes Act 1961 provides a person committed for trial with an alternative, adequate and convenient procedure to obtain the same remedy. There is a comprehensive statutory procedure included in Part XII of the Crimes Act 1961 governing indictable trials which is directed to their just and expeditious disposal, and in a situation such as the present there is no cause for the Court’s wider review process to be brought into play and thereby to interfere with that process.
[40]Osborne v Worksafe New Zealand [2017] NZCA 11, [2017] 2 NZLR 513 at [35].
[41]Auckland District Court v Attorney-General [1993] 2 NZLR 129 (CA) at 136.
[42]Cv Wellington District Court [1996] 2 NZLR 395 (CA) at 400. A decision to commit for trial under s 168 of the Summary Proceedings Act 1957 also involved an application of a “prima facie case” test. In C the High Court had dismissed the application for judicial review on the basis that the defendant had a “tailor made” remedy under then s 347 of the Crimes Act (now s 147 CPA): C v Wellington District Court [1996] 1 NZLR 668 (HC). A full bench of this Court unanimously dismissed the appeal from that decision.
So while we acknowledge that the courts might, perhaps, be a little more ready to engage on review in a s 26 case than in a case involving the ordinary exercise of prosecutorial discretion, caution is still required. Section 26 itself is the way in which Parliament has seen fit to provide for the appropriate level of judicial oversight. The matters referred to at [69] above are all legislative signals that the supervisory function in this area is a circumscribed one.
That said, however, it is not particularly useful to ask in the abstract whether the High Court in this case was “correct to decide that judicial review of the District Court decision was appropriate”. Given it is not disputed that s 26 decisions are justiciable, it is a question that can only be answered when it is more tethered to particular facts. So, the answer to it will largely be dictated by our answer to the next question. That is because it follows from our conclusions on the third issue (below) that we think the High Court did step beyond the role of “gatekeeper” in this case. In conducting an exercise more akin to the determination of an application under s 147 of the CPA, the Judge engaged more than she should have with the merits of the proposed private prosecution. There is some force in the contention that she undertook what was, in effect, a de novo or appellate approach to the s 26 exercise rather than asking, in orthodox judicial review terms, whether the District Court’s decision was unreasonable, unfair or unlawful, in the specific and well understood judicial review sense.
Was the evidence before the District Court sufficient to prove the elements of the charge to the prima facie standard?
We start by observing that the relevant inquiry here should generally be focused on the evidence proposed to be called by the prosecutor, not the words used on the charging document and not matters going to the existence of a potential defence — unless, perhaps, it is of some fundamental jurisdictional kind. To the extent the charging document is infelicitously expressed, but the nature of, and basis for, the key factual allegations are nonetheless clear, and can be seen as going to the elements of the relevant offence, it is the factual allegations — assessed by reference to the elements of s 220 — that should be at the core of the analysis.
Control over property
It is useful to note at the outset that the word “property” is inclusively and expansively defined in s 2 of the Crimes Act as:
… real and personal property, and any estate or interest in any real or personal property, money, electricity, and any debt, and any thing in action, and any other right or interest
In the present case, there can be little doubt that the charge as drafted was not well framed and reflects unclear thinking in terms of identifying what the relevant “property” is alleged to be. But as the discussion at [67] of the decision under appeal suggests,[43] it is not difficult to discern what is intended. As the High Court Judge said, the focus is, necessarily, on the rights conferred by the combined effect of the option created by the TLA and the terms of the ASP. Or, to put it another way, the relevant property here is the rights conferred by, or comprised in, the Security under the TLA and reflected in the ASP — the right conferred on the lender to call on Mr Henderson’s guarantee, to trigger the performance of the ASP and to have the benefit of a sale of the property for $475,000.
[43]Set out at [47] above.
In our view, the evidence established to a prima facie case standard the existence of “property” of a kind falling within the very broad definition contained in s 2 of the Crimes Act.
If that right is the relevant “property” here, then — as the District Court Judge noted — it follows there is at least a prima facie case that Mr Wilson (through WPA) had control over it. It was WPA (as the lender) who could exercise that right and the evidence clearly suggests that, in reality, it would be Mr Wilson making the decision whether to do so.
The argument that the consent of the MDC was required before the option could be exercised is a matter raised by Mr Wilson as a defence and, as far as we know, not something that was raised in the District Court. It follows we do not see it as especially relevant to the prima facie evidence requirement. And in any event, we are not persuaded that it was necessarily a substantive impediment: MDC’s consent was required in the event of any sale, including the sale to Mr Wilson.
As well, we mention that resorting to the general provisions of pt 10 of the Crimes Act (such as ss 218 and 219) seems unnecessary for the purposes of a s 220 inquiry.[44] Although the s 218 concept of “ownership” of property does include control, any associated idea that the relevant property must be capable of being “stolen” in the ss 218 and 219 sense is misplaced, and risks confusion. Rather, s 220 creates a different and discrete category of “theft”, which can be established simply by proof of the four Tallentire elements. Proof of dishonesty, for example, is not required.
Circumstances requiring Mr Wilson to deal with the property in a certain way
[44]As noted in the High Court, s 218 is concerned with matters of ownership. Section 219 contains a general definition of “theft or stealing”. It is well-established that the requirement for dishonesty within theft or stealing does not necessarily form part of an offence under s 220: Tallentire v R, above n 14, at [54].
Proceeding on the assumption that there is a prima facie case that the right to trigger the performance of the ASP was property within the control of Mr Wilson, we turn to the question of relevant circumstances, and of the necessary “requirement”.
This Court in Bublitz v R noted:[45]
[55] The circumstances giving rise to a requirement for the purposes of s 220 were considered by this Court in Nisbet v R.[46] This Court concluded that a requirement will be established if there is a contractual obligation to deal with property in a particular way.[47] However, as Lang J explained in R v Whale, to come within the scope of s 220 a person must be able to identify readily the nature and scope of the obligation the breach of which would amount to a criminal offence.[48] So, for example, a contractual requirement to carry on business in a “prudent and businesslike manner” would not suffice.
[56] In R v Sullivan, Heath J considered whether a comparable provision in a Crown guarantee given in respect of South Canterbury Finance Ltd was sufficient to amount to a requirement under s 220.[49] The Judge was satisfied it did.[50] We agree.
[45]Bublitz v R [2019] NZCA 364, [2019] 3 NZLR 533.
[46]Nisbet v R [2011] NZCA 285, [2011] 3 NZLR 4.
[47]At [33].
[48]R v Whale [2013] NZHC 731 at [489].
[49]R v Sullivan [2014] NZHC 2501.
[50]At [482].
As s 220(4) itself states however, whether particular circumstances give rise to an obligation that a defendant deal with particular property in a particular way is a question of law for the trial judge. Nonetheless, we proceed on the basis that, for the purposes of s 26, there must still be a degree of clarity about the nature of the alleged obligation and a prima facie evidential basis for the circumstances said to give rise to it.
In broad terms — and as the charging document here makes tolerably clear — the relevant requirement is said to be to obtain the best price for the property, if and when it was sold pursuant to the Security in the TLA. If no better price than $475,000 was obtainable then, it is said, Mr Wilson (through WPA) was obliged to exercise the option conferred by the TLA and require performance of the ASP.
And in terms of the person or persons to whom such an obligation might be owed, the charging document refers not only to Silo, but also to the guarantors. This was recognised by the District Court Judge at [21] of his direction, which we repeat here for convenience:[51]
[21] The argument of the proposed prosecutor is that in the circumstances set out, Mr Wilson, [through] WPA, was in a special relationship with the guarantors of the loan, including Mr Mann. That special relationship placed fiduciary obligations on Mr Wilson to choose the option that recovered the debt but did not disadvantage the guarantors. It meant he had an obligation to use the sale and purchase agreement to recover the money owing following the default. …
[51]Further direction of Judge Sainsbury, above n 2.
It is at least arguable that such an obligation might be found in equitable duties owed by creditors to guarantors to preserve the value of their security. Section 176 of the Property Law Act 2007 and ss 25 and 110 of the PPSA may be in play, as well.[52] The rule against self-dealing and the obligations owed by Mr Wilson to his own company may also be relevant.
[52]For the reasons we have already given, we do not consider Cooke J made any final determination of the s 25 issue.
Once that point is reached, there is evidence here capable of establishing the circumstances giving rise to such a requirement. By way of summary, these include the evidence capable of establishing (on a prima facie basis) that:
(a)Silo owed money under the TLA to WPA;
(b)the security under the TLA included guarantees given by Mr and Mrs Mann and by Mr Henderson, the latter of which was coupled with the option to trigger the ASP, and the payment of a guaranteed purchase price for the property of $475,000;
(c)Mr Wilson was the alter ego of WPA;[53]
(d)when a default event occurred under the TLA, Mr Wilson/WPA had a choice about whether to exercise the right to activate the ASP obligation which (subject only to the question of MDC consent) would have seen WPA receive $475,000 for the property and would likely have seen the payment of creditors in full;
(e)Mr Wilson/WPA had a choice about whether to appoint a receiver and, if so, what instructions they gave or information they provided to the receiver (about the existence of the ASP and exercising the option);[54]
(f)the maximum price obtainable for the property on the open market was $370,000, bid by Mr Wilson; and
(g)the choice to appoint a receiver and to sell for a lower price caused loss to Silo, to the guarantors and, it seems, to Mr Wilson’s own company.
[53]We make no comment in this judgment about whether it is necessary to resort to s 66 of the Crimes Act and contend that Mr Wilson was a secondary party to offending by WPA.
[54]This point — if ultimately accepted — might be capable of answering Mr Wilson’s argument that it is the receiver who is the appropriately named respondent here.
At a prima facie level, therefore, we consider that the circumstances giving rise to a relevant requirement could be established on the basis of the proposed evidence. We also consider that these circumstances are sufficiently articulated in the charging document.
Knowledge and intention
Because we consider there is prima facie evidence capable of establishing the existence of a relevant requirement, our starting point here is different from that of the High Court Judge. It is not necessary for us to embark on the exercise (rightly described by her as artificial) of asking whether Mr Wilson knew of a requirement that, on the High Court Judge’s assessment of the evidence, had been found not to exist.
By contrast, on our assessment, and on a prima facie basis, there would seem to be no particular difficulty in establishing that Mr Wilson knew of the circumstances we have outlined above. Whether he also knew of any relevant requirement or obligation arising from those circumstances would, as in most criminal cases, largely fall to be determined as matters of inference, as would his intention. Relevant to those things might not only be Mr Wilson’s own business experience but also (for example) the evidence going to his personal motivation (to acquire the property at the lowest price possible) and the extent to which he chose to inform the receiver about the ASP option. Based on the proposed evidence presently to hand, it seems he did not provide Mr Scutter with a copy of the ASP at all.[55]
Conclusion on evidential sufficiency
[55]The evidence suggests Mr Scutter received a copy only on 9 June 2020, after being alerted to it by Mr Henderson in his letter of 29 May 2020. This was essentially too late: Mr Scutter had either already accepted (or accepted the same day) Mr Wilson’s unconditional offer.
As will be evident from the views expressed above, we consider the District Court Judge was right to see the proposed prosecution as passing through the s 26 gateway. Matters of defence are for later. As he observed, such passage is by no means a guarantee of ultimate success, but the charging document meets the statutory threshold for acceptance for filing.
Result
For the reasons we have given we consider the High Court was wrong to grant the application for judicial review of the District Court decision. The proposed prosecution is not an abuse of process and the evidence provided by the proposed private prosecutor is not insufficient to justify a trial. The appeal is allowed.
The directions made by the High Court are quashed and the directions made by the District Court are reinstated.
The costs award made in the High Court is set aside.
The first respondent must pay costs to the appellant for a standard appeal on a band A basis, with usual disbursements.
Solicitors:
Ord Legal, Wellington for Appellant
WCM Legal, Wellington for First Respondent
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