R v Borlase

[2016] NZHC 2971

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2015-044-001286 [2016] NZHC 2971

THE QUEEN

v

STEPHEN JAMES BORLASE MURRAY JOHN NOONE

Hearing:

27-30 September,

3-7, 10-14, 17-21, 25-28 and 31 October,

1, 2 and 4, 7-11 and 14 November 2016

Counsel

B H Dickey and M S Gatland for the Crown
R M Mansfield and I M Brookie for Defendant Borlase
S Lance and K L Wendt for Defendant Noone

Judgment:

9 December 2016

VERDICTS AND SUMMARY OF REASONS FOR VERDICTS OF FITZGERALD J

Solicitors:           Crown Solicitors, Auckland

Counsel:            RM Mansfield, Auckland

S Lance, Auckland

R v Borlase [2016] NZHC 2971 [9 December 2016]

[1]      Mr Borlase and Mr Noone, I will now give verdicts in relation to each of the charges against you.   I will then ask you to be seated.   I will then explain, in summary form, why I have given the verdicts on each charge.

[2]      I will then deal with consequential issues arising out of my verdicts. [3]       Mr Borlase I find you:

(a)       guilty  of  charges  1,  2  and  3,  which  relate  to  the  payment  of

Mr Noone’s consultancy invoices;

(b)guilty of charges 4, 5 and 6, which relate to the provision of travel, accommodation and other benefits to Mr Noone;

(c)       guilty of charges 7 and 8, which relate to the provision of travel, accommodation and other benefits to Mr George;

(d)not guilty of charges 9, 10, 11 and 12, which relate to the alleged inflation of invoices.

[4]      Mr Noone, I find you:

(a)       guilty of charges 1, 2 and 6, which relate to the payment of your consultancy invoices;

(b)guilty of charges 3, 4 and 5, which relate to acceptance by you of travel, accommodation and other benefits provided by Projenz.

[5]      Please be seated while I summarise my reasons for giving these verdicts.

[6]      My Reasons for Verdicts are lengthy, extending to more than 200 pages. Necessarily what I will say now by way of this very brief summary will be incomplete.  There will be differences of expression in what I say now from what is written in my full reasons.   No inconsistency is intended.   My full Reasons for Verdict take precedence.

[7]      Copies of my full Reasons for Verdict will be handed to you, your counsel and media representatives present in Court when I leave the Court. They will also be posted on the Decisions of Public Interest part of the Courts of New Zealand website no earlier than 1pm today.

Background – bribery and corruption charges

[8]      Each of Mr Borlase and Mr Noone was charged with offences pursuant to s 105 of the Crimes Act – bribery and corruption of an official.  The charges spanned a seven year period, from 2006 to 2013.

[9]      I should say at this point that, despite the ordinary meaning that is usually given to the words “bribery” and “corruption”, the legislation ascribes different, and less pejorative, meanings to them.  As a result, the offence is framed in broad terms. In particular:

(a)      It does not require any dishonesty on the part of the official receiving the benefit or the person providing it.

(b)Nor does it require any improper action to be carried out on the part of the official concerned.

(c)      And despite submissions to the contrary on behalf of Mr Borlase, I have also found that it does not require that the person providing the benefit intended to influence the official to carry out an improper act.

[10]     Rather, and as the Supreme Court has made clear, it is an offence for an official to knowingly accept benefits in connection with his or her official acts. There is a “de minimis” exception for gifts of token value, and which are just part of the “usual courtesies of life”.  Whether or not a particular benefit falls within this exception will require close consideration of its value, as well as the context in which it is provided.  No “hard and fast rules” can be given.

[11]     The bribery and corruption charges against Mr Borlase and Mr Noone related to three main types of benefits:

(a)      First, payment by Projenz of Mr Noone’s monthly invoices that were said to be for consulting services Mr Noone provided to Projenz over the period 2006 to 2013. The Crown said the consulting services were a “sham” and the payments were corrupt.   The defendants said that genuine consulting services were provided by Mr Noone throughout this period.

(b)Second, the provision of benefits to Mr Noone, such as travel and accommodation.   The Crown said these went beyond the “usual courtesies of life” and were corrupt.  The defendants said these were either normal incidences of marketing and relationship building with Mr   Noone   (within   a   culture   of   collaboration   that   was   being encouraged at Rodney District Council and Auckland Transport), or otherwise provided in connection with the consultancy services, and therefore not Mr Noone’s official role.

(c)      Third,  and  in  relation  to  charges  against  Mr  Borlase  only,  the provision  of  benefits  to  Mr  George,  again  being  travel, accommodation and similar matters.   Again, the Crown said these went beyond the usual courtesies of life and were corrupt. Mr Borlase said that these were again normal incidences of marketing and relationship building with Mr George (within a culture of collaboration) or were otherwise provided on compassionate grounds without any intent to influence Mr George.

[12]     The first of these three categories, i.e. the payment of Mr Noone’s consulting invoices, totals some $1.1m.   The other benefits provided to Mr Noone total approximately $84,000.   The benefits provided to Mr George total approximately

$125,000.

Mr Noone’s consulting services (Borlase:  charges 1, 2, 3; Noone:  charges 1, 2,

6)

[13]     Mr  Borlase  and  Mr  Noone  said  that  Mr  Noone  provided  ongoing  and

substantial “business development” consulting services to Projenz during the period

2006 to 2013.   I have concluded that Mr Noone did not provide such consulting services to Projenz. There are six key reasons for this:

(a)      First,  the  sheer  number  and  frequency  of  Mr  Noone’s  consulting invoices to Projenz.  Mr Noone rendered an invoice every month (bar one) over that seven year period, and sometime more than one invoice per month.   They were for substantial sums, in the range of around

$8,000  to  $10,000  per  month.     They  stated  on  their  face  that Mr Noone was providing around 90 to 110 hours every month in consulting services to Projenz. This was when he was employed in senior management roles at Rodney District Council (albeit only four days per week for the first two years) and then at Auckland Transport.

(b)Second, there was no documentary evidence of any of the output or “work product” of Mr Noone’s purported consultancy services over the seven year period.  Mr Borlase said that all of Mr Noone’s advice was  verbal.    I find  it  implausible  that  if  substantial  and  ongoing consulting advice had been provided over a seven year period, there would be no documentary record of it.

(c)      Third,   Mr   Noone’s   and   Projenz’  entry   into   two   “standalone” consulting agreements, in 2010 and 2012.  Under the first standalone agreement,  Mr  Noone  was  paid  $200,000  (plus  disbursements). Under the second standalone agreement, Mr Noone was paid $40,000

(plus disbursements).   Importantly, the sums paid under these two agreements  were paid  in  addition  to  Mr Noone’s  regular monthly invoices, which continued in parallel with the payments under these agreements.     The  evidence  disclosed  no   discernible  difference between the advice Mr Noone was said to have provided under these agreements and what he was said to be providing pursuant to his regular monthly invoices.  Again, there was no documentary evidence of any “work product” from these two standalone agreements.

(d)Fourth, the lack of knowledge by others of Mr Noone’s consulting services.   A number of witnesses who ought to have known about Mr Noone’s consulting services, given the purported nature of them, gave evidence that they did not.  In addition, witnesses who said they were aware of Mr Noone’s consulting services had no firsthand knowledge of them; rather, their sole source of knowledge was Mr Borlase.  Regrettably, I have also found some witnesses unreliable and unconvincing in the evidence they gave in this regard.  It will also be evident from the verdicts I have given that I did not find significant aspects of Mr Borlase’s evidence to be credible.

(e)      Fifth, Mr Noone’s and Projenz’ non-disclosure of the arrangements between  them,  including  at  times  when  disclosure  was  plainly required (such as during the two tender processes carried out during the periods in question).  Mr Noone in particular repeatedly failed to disclose to his employers his arrangements with Projenz, despite numerous opportunities to do so.  I infer from this lack of disclosure that Mr Noone and Mr Borlase both knew that the arrangements were wrong.

(f)      Finally,  I  do  not  accept  that  the  various  examples  of  work  that Mr Borlase said Mr Noone carried out support the proposition that he provided substantial business development advice to Projenz over the period 2006 to 2013.  At the most, they show he may have carried out a very small number of “one off” items of work for Projenz.   In

respect of some of the examples, I am not satisfied that Mr Noone actually did the work suggested.

[14]     I have carefully considered all of the evidence on the above matters.  Taking all of those matters together, I have no doubt that the payments particularised to these charges were not provided in relation to consultancy services provided by Mr Noone.

[15]     Having made that finding, I also have no doubt that the payments were made in connection with Mr Noone’s official roles at Rodney District Council and Auckland Transport, and with an intent to influence him in that regard.     I am satisfied beyond reasonable doubt that both Mr Noone and Mr Borlase knew this at the relevant times.

Other benefits provided to Mr Noone (Borlase:  charges 4, 5, 6; Noone:  charges

3, 4, 5)

[16]     These benefits largely related to overseas travel, accommodation and other more minor matters.

[17]     While I have found that the Crown has proved these (representative) charges beyond reasonable doubt, I should emphasise that this is not in relation to all the particulars to them.   In respect of some of the particulars, there simply was not sufficient  evidence.    In  relation  to  others,  I  was  satisfied  that  the  de  minimis exception applied.  However, in respect of benefits such as certain overseas travel, and regular hotel accommodation for Mr Noone, I found the charges proved to the requisite standard.

[18]     In particular, I consider that the provision of personal travel and regular hotel accommodation, in the context in which it was provided in this case, to fall well out the de minimis exception.   I also reject Mr Borlase’s evidence that some of these benefits were provided for “goodwill” or “compassionate” reasons.  I have no doubt that these benefits were provided in connection with Mr Noone’s roles at Rodney District Council and Auckland Transport and with an intent to influence him in that regard.  I am also satisfied that when Mr Noone received these benefits, he knew he

was doing so in connection with his roles at Rodney District Council and Auckland

Transport.

Benefits to Mr George (Borlase: charges 7 and 8)

[19]     Mr Borlase faced two further charges, in respect of the provision of benefits to  Mr George.   Again,  I find  that  the Crown  has  proved  these (representative) charges beyond reasonable doubt, but not in relation to all the particulars to them. This is also because in some cases, there was not sufficient evidence to prove the elements  of  the  offence,  and  in  others,  because  I was  satisfied  the  de  minimis exception applied.

[20]     However,  in  relation  to  the  larger  items  to  which  these  charges  relate, including funding travel for Mr George and his family to Fiji and multiple trips to Japan for family reasons, I am satisfied that the Crown has proved the charges to the requisite standard.  Again, I reject Mr Borlase’s attempt to categorise these benefits as “goodwill gestures” or provided on compassionate grounds only.   The value of these benefits runs to tens of thousands of dollars.  The only logical inference is that they were provided in connection with Mr George’s roles at Rodney District Council and Auckland Transport and with an intent to influence him in that regard.

A final word on these charges

[21]     I make one further observation in connection with these charges.  There was no evidence before me that the level and type of benefits provided by Projenz in this case were provided in other teams or areas at Rodney District Council or Auckland Transport.  Accordingly, it is important that the findings and observations made in my full Reasons for Verdict are not taken to apply to Rodney District Council or Auckland Transport more generally.

“Inflating of invoices” (Borlase:  charges 9 – 12)

[22]     The Crown’s case was that Mr Borlase inflated invoices sent to Rodney District Council in order to recoup the corrupt payments and benefits he was providing to Mr Noone, Mr George and others.

[23]     As noted, I have found Mr Borlase not guilty of these charges.

[24]     I   found   much   of   Mr   Borlase’s   evidence   in   relation   these   charges unpersuasive.   However, even putting aside that evidence, I was not sure, on the basis of the remaining evidence, that the elements of the relevant offence were made out.

[25]     In part, this stemmed from the time period to which these charges relate, namely 2006 to 2009.  That is some seven to 10 years ago, with the consequence that the documentary record in respect of matters relevant to these charges was incomplete.  In addition, witnesses could no longer recall matters or details that were relevant to the elements the Crown was required to prove.

[26]     Ultimately, standing back and reviewing all of the evidence in relation to these charges, I was not satisfied that the charges were proved beyond reasonable doubt.   I had concerns however, about the adjustments Mr Borlase made to the various invoices.  I have observed in my Reasons for Verdict that if the burden of proof had been the civil burden, the outcome might have been different.  However, I reminded myself that I must be sure of Mr Borlase’s guilt on these charges, and I was not.

Consequential issues

[27]     Mr Borlase, Mr Noone, please stand.

[28]     Mr Borlase, I have found you guilty of charges 1 to 8. On those you are convicted.   I have found you not guilty of charges 9 to 12.   On those you are discharged.

[29]     Mr Noone, I have found you guilty of charges 1 to 6.    On those you are convicted.

[30]     I will  now  deal  separately with  consequential  matters  arising  out  of  the verdicts I have given today.

Fitzgerald J