McKelvy v Police HC Auckland CRI 2004-019-3992

[2005] NZHC 1710

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2004-019-003992

MILES JOHN MCKELVY

Applicant

v

NEW ZEALAND POLICE

Respondent

Hearing:         29 April 2005 Appearances: P Kaye for Applicant

J Foster for Respondent Judgment:      2 May 2005

JUDGMENT OF SIMON FRANCE J

Counsel:

Mr Peter Kaye, Barrister, Auckland Solicitors:

Crown Solicitors, Hamilton

MCKELVY V POLICE HC AK CRI 2004-019-003992 [2 May 2005]

[1]    This is an application for bail by Mr McKelvy. Mr McKelvy was denied bail in the District Court on 26 May 2004. He appealed that decision out of time. The appeal came before Williams J on 14 October 2004. His Honour recognised that there may be a case to grant Mr McKelvy bail, but considered that given the lapse of time it was appropriate for a fresh application to be made to the District Court. That would preserve the appeal rights of the applicant. The appeal was accordingly dismissed, and, as it happens, no further application was made. The matter has now proceeded through depositions and Mr McKelvy is committed to the High Court.   On his behalf, a fresh application for bail is now made.

[2]The primary bases for the application are:

a)the length of time before trial. The appellant has been in custody  since his arrest in May last year. The trial is not expected to occur before early next year;

b)the remand position of the co-accused. There are 22 persons thus far charged in what is a complex fraud prosecution. All other persons have obtained bail, including two other persons who are alleged to be ring-leaders with the applicant. There was some issue as to whether they could be seen as being on the same level as the applicant or rather as his right-hand men. Whatever is the case, and it is the  Crown allegation that the applicant is the primary instigator, it is plain that these other two co-accused who have bail are alleged to be significant players. Whilst both of those persons obtained bail, one  has now breached bail and is back in custody;

c)ability to instruct counsel and prepare the defence in what is a complex allegation.

[3]    It is alleged that Mr McKelvy is the mastermind behind a complex series of frauds that have been widespread and caused much damage. The summary of facts runs to 93 pages. In very brief terms, it is alleged that the applicant, together with

Robert Sterling and Arden Fatu, were the ring-leaders of a substantial multi-faceted criminal enterprise that targeted a number of individuals for substantial fraudulent gain. Mr McKelvy was said to be the “brains”.

[4]    Mr Kaye helpfully summarised the nature of the allegations as involving four different types of fraudulent transactions concerning “real” property. The different transactions involve the not uncommon practice of obtaining borrowing against property which has been given a falsely inflated value. The various methods alleged involve forgery of titles to property, and false pretences. In some instances charges have been registered against property without the true owners knowing.

[5]    The Police presented a detailed and balanced notice of opposition. The scale of the offending is illustrated by the fact that Mr McKelvy faces 112 charges at the present moment. Although the proposition seems extraordinary, Mr Kaye estimates that the trial may take six months. Mrs Foster for the Crown does not necessarily accept that figure, but accepts that it will be many months. The potential values involved in the offending are very substantial. If convicted, and especially given the applicant’s previous record, a substantial term of imprisonment is inevitable.

[6]    The applicant has 12 previous convictions for fraud and dishonesty occurring between February 1996 and December 2004.

Discussion

[7]    The issues in relation to the determination of bail are reasonably easy to identify. Mr McKelvy has been in custody for 11 months to date. Given the nature  of the trial, it is likely that it will not commence until the first part of 2006. That would mean a period since he was arrested of approximately 20 to 21 months. That length of custodial remand would give any Court cause for significant concern.

[8]    However, the figures are arguably not quite so bad as they appear. In March of this year, Mr McKelvy was sentenced on six counts of using cheques with intent to defraud, and one of making a false statement akin to perjury. He was sentenced to 18 months imprisonment. The period of time that he has spent on remand on the

present charges was credited to that sentence and means that he has served that sentence. Accordingly, in my view, although it is 11 months since he was remanded in custody, as of today only two months of that time can now be attributed to custodial remand. The balance is to be seen as time spent serving a sentence. This factor alleviates what would otherwise be a compelling factor in favour of bail. It still means custodial remand of 12 months, assuming a March trial date. On fraud charges that is still a long time.

[9]    The second matter to which Mr Kaye refers is the difficulty in trial preparation. Ms Foster accepts that it is an exceedingly complex case. For myself, I do not think it can be sensibly contested that the ability to prepare for such a trial is compromised by a remand in custody. That does not of itself mean that such a remand may not be necessary, but it is a factor in favour of the grant of bail if that is at all possible.

[10]   These two matters – time and ability to prepare defence – would cause me to grant bail unless I was satisfied that the public safety cannot be adequately protected by appropriate conditions. Section 12 of the Bail Act 2000 applies. The  public  safety issues in this case are the risk of reoffending, and the risk of interference with the Crown case.

[11]   To take the latter point first, there is intercepted material which is capable of giving rise to the belief that Mr McKelvy has sought to have documents destroyed and evidence otherwise tampered with. There is also an allegation from a seemingly quite unreliable source of an offer of money for changed testimony. I am advised the investigation is on-going and more arrests may follow. My general assessment of this is that 11 months from arrest is long enough for the prosecution to secure the overall security of its case. I do not see its on-going nature as a reason to deny bail. However, I accept as a relevant factor the risk that Mr McKelvy will struggle to observe the rules. It is no doubt this factor that led earlier Judges to limit access between co-accused as a bail condition. While I have some uncertainty as to the breadth of wording of that condition, the underlying rationale for it illustrates the concern felt about the accused. The text of the intercepted communications is

disturbing, suggesting not only efforts to destroy documents but apparently threats to harm someone (MB311) so as to save their “own arse”.

[12]   Against that discussion, I turn to the issue of the risk of re-offending. Under this heading I will bring together various strands that were raised in submissions.

[13]   Mr Kaye relied, as noted earlier, on the position of the co-accused in relation to bail. He took me through the decisions of Judge Spear, who has great familiarity with this matter, in relation to the co-accused Mr Fatu. His essential submission was that there was very little to distinguish between the two, and consistency required a grant of bail.

[14]   In reply, Mrs Foster pointed to several distinguishing factors, including the greater role of Mr McKelvy, the fact that unlike Mr Fatu, s 12 of the Bail Act 2000 applies, and Mr McKelvy’s previous history. Bringing those together, I take the position to be that it is submitted that the onus is on Mr McKelvy, the circumstances of the offending show that it is he who has been responsible for devising the schemes, and accordingly when one looks at his past record and his role in the present offending, the risk of re-offending is obvious. Not only is it obvious, it is at  a level that means that bail should not be granted.

[15]   In 2001 Mr McKelvy pleaded guilty to some offending in what is known as the “Focus Finance” matter. He agreed to provide evidence for the Crown, and as a result of that received a sentence of supervision. A term of that supervision was oversight of his business activities. Mrs Foster then notes that the alleged present offending had begun prior to him pleading guilty and continued right through that period when he was under supervision and assisting the Crown. In response to this Mr Kaye makes the fair point that it is alleged offending.

[16]   However, in 2002 he was arrested on further offending to which he was granted bail. It is that offending concerning which he was recently sentenced to the 18 months term of imprisonment referred to earlier in the judgment. It too is offending that has occurred in the relevant period. During that period Mr McKelvy has also been convicted of making a false statement. That arose in the context of

him allegedly assisting the Crown and signing a brief of evidence which was then shown to be untrue. These matters arose while under the sentence of supervision discussed in the preceding paragraph.

[17]   Mr McKelvy has numerous criminal convictions for fraud. In  my assessment, even without the present allegations, and given his recent history, there is an obvious risk of re-offending.

[18]   To put it bluntly, the Crown allege Mr McKelvy has been shown to be a committed fraudster, a person of dishonesty concerning whom there are real risks of re-offending and consequent dangers to the public.

[19]   These matters are difficult to assess, but the present bail application lends some credence to the Crown position. In support of the application Mr McKelvy filed an affidavit. There are three matters arising from it which are submitted to cause concern.

[20]   The first is that Mr McKelvy sought to explain the intercepted conversations, which are the basis of concerns over interference with evidence. He refers to one of the participants in the conversation and in the affidavit includes the following statement:

CC is a very good friend of mind and has been for approximately 15 years. He has been my accountant for about four or five years. I knew that he would not have said these things and it made me angry that CC was telling people that he had. This conversation was about me going to CC and having a go at him for spreading these rumours. It made me quite angry and I wanted to confront CC about it.

[21]   There is no doubt that Mr McKelvy has paid attention to this paragraph because there are mistakes in it that he has specifically corrected and initialled.

[22]   Subsequent to this affidavit the Crown has filed an affidavit by a Police officer which appends a signed statement from CC. In that statement he says that whilst he has known Mr McKelvy for 15 years, it is completely and utterly untrue that he has been a very good friend of his. He says that he has never been a friend of Mr McKelvy and at best he has been a business acquaintance. He also denies that he

has been Mr McKelvy’s accountant for four or five years, describing that allegation as “absolutely untrue”. He points out that he has not practised as a chartered accountant for many years, and names the person he has always believed to have been Mr McKelvy’s accountant.

[23]   I was initially minded to put considerable weight on this. To tell a blatant untruth in an affidavit made in support of bail is something that undermines the whole application. It has been an untruth that puzzled me from the outset as being odd, to say the least. Mr Kaye fairly commented that it was plain Mr McKelvy had focussed on the paragraph and he could not explain it. Reading the materials further since the hearing, I suspect that the initial reference to “CC” at the start of the first sentence is also an error and that it should have named a different person, someone who is in fact Mr McKelvy’s friend. That error would be totally consistent with the other corrections already made in the paragraph, where the original has the names transcribed and the applicant has hand-written amendments. The difficulty with this benevolent view is that the likely correct name, RH, is not an accountant.

[24]   A second part of Mr McKelvy’s affidavit in support of bail addresses his family situation. The Police have filed an affidavit from Mr McKelvy’s estranged wife, which disputes the claims that Mr McKelvy makes in this part of his affidavit.  I do not place particular weight on this conflict, in that I do not find that anything his former wife says shows his present affidavit to be untrue. The differences can be explained as coming from a different point of view. Finally, at the hearing it also emerged in evidence from the bar (the O/C was available if needed) that claims to settled accommodation could generously be best described as exaggerated.

[25]   The Police are obviously concerned about Mr McKelvy’s position and have responded to his affidavit with assiduous inquiries of their own. These inquiries  have led to doubts arising as to both addresses proffered to date as suitable for bail. However, as I pointed out to Mrs Foster, there is a need for caution to ensure that inquiries of any address do not have the unintended consequence of making the address unavailable. The last address, as I understand it, was a vacant house in the “To let” column of the paper. It is a concern that Mr McKelvy would advance this

as a bail address when no tenancy had been confirmed. On the other hand, it is hard to see how it could be unsuitable, so as to require extensive inquiry.

[26]   This is not an easy matter to determine. There is however, much to support a concern that Mr McKelvy presents a danger to the public and the property of the public. His recent offending speaks for itself. The timing of his 2002 offending shows a commitment to fraudulent activity despite being subject to Court sanction and supervision of his business records. My Kaye disputes an assessment of a strong case against him on the present offending on the basis that it is simply too complex. On the other hand a prima facie case has been conceded, although it is true that often not too much weight should be attached to that.

[27]   I remain worried by the affidavit filed in support. There is a lack of accuracy in it that is troubling. I have endeavoured to explain away the CC paragraph, but am still left with a real suspicion of untruth. I do not doubt that Mr McKelvy would require close supervision as regards his actions in relation to the case he is facing. I note a factor given by the Judge when granting the co-accused bail was the fact that Mr McKelvy was not on bail. There is obviously a legitimate worry about the  liaison that may occur between co-accused and what conduct might result from that.

[28]   In the end I have concluded that there is just cause for continued detention. Mr McKelvy’s recent history, and the intercepted conversations raise sufficient concerns on two relevant bail risks such that I am not satisfied he should be granted bail.

Simon France J