R v Borlase
[2016] NZHC 2970
•9 December 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2015-044-001286 [2016] NZHC 2970
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 2016Counsel
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 NooneJudgment:
9 December 2016
REASONS FOR VERDICT OF FITZGERALD J
Solicitors: Crown Law, Auckland
Counsel: R Mansfield, Auckland
S Lance, Auckland
R v Borlase [2016] NZHC 2970 [9 December 2016]
CONTENTS
A. INTRODUCTION AND VERDICTS …………………………….…….[1] B. THE STRUCTURE OF THESE REASONS FOR VERDICTS ……..[30] C. EVIDENTIAL ISSUES …………………………………………..……..[32]
D. BRIBERY AND CORRUPTION OF AN OFFICIAL – LEGAL PRINCIPLES ………………………………………………………...….[64]
E. DISHONEST USE OF A DOCUMENT – LEGAL PRINCIPLES…………………………..…………………………....….[132]
F. FACTS ……………………..……………………………………...…….[148]
G. NOONE’S CONSULTACY SERVICES (BORLASE:
CHARGES 1, 2 AND 3; NOONE: CHARGES 1, 2 AND 6) …...……[436]
H. OTHER BENEFITS TO NOONE (BORALASE:
CHARGES 4, 5 AND 6; NOONE: CHARGES 3, 4 AND 5) ...…..…..[616]
I. BENEFITS TO GEORGE (BORLASE: CHARGES 7 AND 8) .…...[707]
J. THE ALLEGED “INFLATING” OF INVOICES (BORLASE
CHARGES 9-12) ……………………………………………………….[771]
K. CONCLUSION ………………………………………………...………[834]
A. INTRODUCTION AND VERDICTS Verdicts
[1] I have today delivered the following verdicts:
(a) Murray John Noone – guilty of charges 1 – 6;
(b) Stephen James Borlase – guilty of charges 1 – 8; not guilty of charges
9 – 12.
[2] What follows is my reasons for the above verdicts.
Overview of the charges
[3] Mr Noone was charged with six charges of bribery and corruption of an official pursuant to s 105(1) of the Crimes Act 1961. The charges were brought on a representative basis. They covered three periods. The first is 3 April 2006 to 23
June 2008. During this period, Mr Noone was the Director of Transport at Rodney
District Council (“RDC”). The second period spans 24 June 2008 to 31 October
2010, when Mr Noone was the Director of Infrastructure at RDC. The third period runs from 1 November 2010 to 29 July 2013, during which time Mr Noone was the Road Corridor Maintenance Manager for Auckland Transport.
[4] Mr Noone is alleged to have corruptly accepted approximately $1.2m in payments and other benefits from Projenz (2005) Limited (“Projenz”), a long standing provider of professional engineering services to RDC and Auckland Transport. The vast majority of this amount (being some $1.1m) represents payments made to Mr Noone by Projenz for consultancy services said to have been provided by Mr Noone to Projenz. The balance of approximately $84,000 represents various other benefits said to have been corruptly received by Mr Noone from Projenz, including travel, accommodation and other benefits.
[5] At all relevant times, Mr Borlase was one of two directors and shareholders of Projenz. Mr Borlase faced 12 representative charges. Eight of these charges were of bribery and corruption of an official pursuant to s 105(2) of the Crimes Act. Of
those charges, six related to payments or benefits Mr Borlase is alleged to have caused Projenz to pay to Mr Noone. These six charges effectively mirrored the charges (and charging periods) in relation to Mr Noone. The remaining two charges under s 105(2) related to benefits (in the form of travel, accommodation and other benefits) said to have been provided by Projenz to Barrie Kenneth James George. These alleged benefits total approximately $125,300. These charges span the period December 2005 to June 2013, when Mr George was an employee of RDC and then Auckland Transport.
[6] Mr George was separately charged under s 105(1) of the Crimes Act and pleaded guilty to certain of those charges. He was sentenced by Lang J on 1
September 2016. Mr George gave evidence for the Crown in this proceeding. I will say more about Mr George’s evidence later. However, for present purposes, I record that his guilty pleas are irrelevant to the position of Mr Noone and Mr Borlase in this proceeding. I confirmed to counsel at the outset of the trial that I had not read and did not propose to read any materials relating to Mr George’s convictions or his sentencing.
[7] Mr Borlase also faced four additional charges of dishonestly using a document in contravention of s 228(b) of the Crimes Act.1 These charges cover the period 1 April 2006 to 30 June 2009. The essence of these charges is that Mr Borlase is said to have “inflated” invoices submitted by Projenz to RDC.
Outline of Crown case
[8] The benefits alleged to have been corruptly paid or provided to Mr Noone and Mr George, by or at the instruction of Mr Borlase, can be broken down into three main categories.
Mr Noone’s consultancy fees
[9] The first category is regular payments to Mr Noone in respect of consultancy services said to have been provided by Mr Noone to Projenz. In short, the Crown
says that no such consulting services were provided by Mr Noone. The Crown’s
1 As it was prior to 6 November 2015.
case is that the monthly invoices rendered by Mr Noone’s consultancy company to Projenz over a seven-year period were, in effect, a vehicle by which corrupt payments were made to Mr Noone.
[10] The Crown points to and places considerable reliance on the fact that no contemporaneous documentary evidence of any “work product” of Mr Noone’s consultancy services was located, in either Mr Noone’s or Projenz’ records. The Crown also highlights that those persons (other than Mr Borlase) who gave evidence that they were aware of Mr Noone providing consultancy services to Projenz were not aware of any details in this regard, and their knowledge stemmed only from being told by Mr Borlase himself (i.e. they had no independent knowledge).
[11] The Crown also points to two “standalone” consultancy agreements entered into between Mr Noone and Projenz, by which further amounts were paid to Mr Noone:
(a) The first was entered into in June 2010, pursuant to which Mr Noone was paid $200,000 plus disbursements, plus GST (over seven equal instalments). This was in addition to the monthly invoices that Mr Noone continued to render to Projenz. The Crown says that the purpose of this agreement was to incentivise Mr Noone to accept a role with (the to be created) Auckland Transport, rather than accepting another job offered to him at that time in the private sector. The Crown says that by incentivising Mr Noone in this way, Mr Borlase secured “his man” within Auckland Transport.
(b)The second agreement was entered into in June 2012, pursuant to which Mr Noone was paid $40,000 plus disbursements, plus GST (over four equal instalments), again in addition to his ongoing monthly invoices. The Crown says that this was essentially a “reward” to Mr Noone for certain Auckland Transport contracts being awarded to Projenz a few days earlier.
[12] The Crown says the fact that neither Mr Noone nor Projenz disclosed their alleged consultancy arrangements to RDC or Auckland Transport reinforces that each of Mr Noone and Mr Borlase knew that the arrangements were wrong.
Benefits associated with conferences/corporate hospitality
[13] Crown witnesses gave evidence that Projenz hosted Mr Noone and/or Mr George at various lunches and dinners, generally with other RDC and Auckland Transport employees. Sometimes Projenz offered and paid for overnight accommodation after such events. Projenz also paid for Mr Noone and Mr George, and other RDC/Auckland Transport employees, to attend conferences (both in New Zealand and overseas) and paid for travel and accommodation in that regard. The Crown also presented evidence of Projenz paying for technology such as iPads and iPhones for Mr Noone and Mr George, as well as other RDC/Auckland Transport employees. The Crown says that these benefits went beyond permissible corporate hospitality and marketing.
Personal benefits
[14] Crown witnesses also gave evidence that Projenz, on Mr Borlase’s instructions, paid for personal travel and other benefits of RDC and Auckland Transport employees, including Mr George and Mr Noone. These benefits included travel for one employee and his family to South Africa; another employee and his family’s holiday to Rarotonga; various trips by an employee to Queenstown and Christchurch to visit family; travel by Mr George and his family to Fiji; and several trips for Mr George and his family to Japan. Projenz also paid for approximately 53 nights of hotel accommodation for Mr Noone in the Auckland CBD. The Crown says that these personal benefits were corrupt and can only have been provided with an intent to influence their recipients.
[15] The Crown also points to the fact that all of these payments and benefits were “matched to” or “coded against” RDC or Auckland Transport job codes in Projenz’ internal accounts. The Crown says this demonstrates that Mr Borlase considered the payments and benefits to be a “cost of doing business” with RDC/Auckland Transport.
[16] The Crown does not point to any particular act or omission of Mr Noone or Mr George to the advantage of Projenz that it says was brought about by influence. It says that actual influence is not an element of the s 105 offence, and that intent to influence is sufficient. The defendants do not dispute that an intent to influence is sufficient. The Crown nevertheless points to Projenz’ steadily increasing revenues over the periods in question, particularly after the award of significant RDC contracts in 2009.
Inflating invoices
[17] Finally, the Crown says that over the period 2006 to 2009, Mr Borlase “inflated” invoices from Projenz to RDC beyond what he knew Projenz was entitled to charge RDC. The Crown says that this was done by increasing the number of hours shown for Projenz sub-consultants on Projenz’ invoice to RDC, compared to the actual number of hours those sub-consultants had worked. The Crown says that Mr Borlase inflated these invoices to recoup at least some of the corrupt payments and benefits being provided to RDC employees at that time.
Outline of defence case
[18] Other than in some minor aspects, neither defendant disputes that the various payments or benefits were provided to Mr Noone, Mr George, or to the other RDC/Auckland Transport employees. Rather, the defence say the real issue is why these payments and benefits were provided. The defendants say that the Crown has failed to prove that the benefits were provided or received corruptly or with an intent to influence (in the case of Mr Borlase).
Noone’s consultancy fees
[19] The defendants say that the consultancy arrangements between Mr Noone and Projenz over the period 2006 to 2013 were genuine, and Mr Noone provided substantial and valuable advice to Projenz. Mr Borlase accepts that there is no documentary evidence of any “work product” from Mr Noone’s consultancy services, but says that the output was all verbal advice provided directly to him by
Mr Noone. Mr Borlase said that he preferred this way of receiving the advice, rather than receiving and paying for written reports.
[20] Mr Borlase also says that there was no effort to “hide” the payments to Mr Noone, in that they were all recorded through Projenz’ accounts, rather than being paid in cash or by some other means. Mr Borlase also points to the evidence of a number of Crown witnesses, who said that they were aware that Mr Noone was providing consultancy services to Projenz. To the extent that other Projenz employees or sub-consultants were not aware of Mr Noone’s services, Mr Borlase says that is not surprising, given the nature of the services being provided (namely strategic business development advice). Other than Mr Borlase and, to an extent, the second Projenz director, there was no need for others to be involved in the advice.
[21] Mr Borlase also says that it is not for the Crown to “dictate” how he received the advice from Mr Noone or what its value was to Projenz. Mr Borlase says that he considered Mr Noone’s advice to be very valuable and that it led to a number of increased revenue streams for Projenz.
[22] Mr Noone says that the key matter for determination in respect of the charges against him is whether the Crown has proved beyond reasonable doubt that the consultancy arrangements were a “sham” (a word used by the Crown in its opening). Unless the Crown has proved this, Mr Noone says that the Crown will have failed to prove one of the elements of the offence, namely that the payments were received by Mr Noone in his official capacity. Mr Noone adopts broadly the same approach as Mr Borlase as to why the Crown has failed to prove that the arrangements were a sham.
[23] In his closing address, Mr Noone’s counsel, Mr Lance, accepted that in hindsight, it may have been advisable for Mr Noone to have disclosed his consultancy arrangements with Projenz to his employer, including during two tender processes carried out during the periods in question. However, he submitted that this would have made no difference to the outcome of the tender processes, as the evidence establishes that Projenz won the tenders on merit. Mr Lance further submitted that any failure to disclose the conflict was an employment issue only, and
it does not necessarily lead to an inference that there was anything corrupt about the arrangements between Mr Noone and Projenz.
Benefits associated with conferences/corporate hospitality
[24] The defendants say that the Crown has failed to prove that any of these benefits were paid or received corruptly, and with an intent to influence (in the case of Mr Borlase).
[25] Mr Borlase says that these types of benefits, including those provided to Mr Noone and Mr George, are consistent with industry standards and were provided in an effort to foster and maintain good working relationships. The defendants point to the desire on the part of RDC and Auckland Transport for true collaboration between each of those entities and their contractors and consultants. This included “partnering” RDC and Auckland Transport employees at relevant industry conferences (both in New Zealand and abroad), and the hosting and paying for various functions as a means of collaboration and joint celebration of success. The defendants also point to the evidence of a number of Crown witnesses, who confirmed these types of benefits are “industry standard” marketing and relationship building.
Personal benefits
[26] Mr Borlase accepts that he arranged for Projenz to provide or pay for a number of personal benefits to Mr Noone, Mr George and other RDC and Auckland Transport employees, including those referred to earlier. Mr Borlase says that he did so as a gesture of goodwill, or on compassionate grounds in the particular circumstances of each case. For example, he says that he was happy for Projenz to fund Mr George and his family’s trips to Japan, given the very difficult circumstances in which the George family found itself (Mr George’s son had been arrested in Japan, and was serving a lengthy custodial sentence in that country). He was similarly happy to pay for Mr Noone to stay in central Auckland hotels over the
2010/2013 period, as he was aware that Mr Noone was experiencing marital difficulties at that time and was happy to help out a friend.
[27] Mr Noone points to the same matters, and submits that the evidence simply demonstrates that Mr Borlase was happy to assist friends when in need.
Inflating invoices
[28] Mr Borlase largely accepts that he increased sub-consultants’ hours shown on Projenz’ invoices to RDC from what were shown in the submission-consultants’ invoices to Projenz. However, he says that what the consultants charged Projenz was not determinative of what he was, and what he believed he was entitled to charge RDC. He said that he reviewed the invoices each month, and exercised judgement as to the value RDC had received that month, in the context of what he understood at the time he was entitled to charge. In light of those matters, he arrived at a “bottom line” amount to charge RDC, which in all cases was less than what he understood he was entitled to charge. The hours shown on the invoices were then adjusted to align with this “bottom line” amount.
[29] Mr Borlase points to the fact that the Crown did not offer evidence of what Projenz and RDC had agreed Projenz could charge in respect of any of the invoices in question. Mr Borlase gave evidence that for some of the invoices, his understanding was that a lump sum had been agreed (and in all cases, the “bottom line” number shown on the invoice was lower than the lump sum). Where Mr Borlase could not recall or locate evidence as to the agreed basis for charging, he said that the Crown had not discharged the burden on it in relation to these charges.
B. THE STRUCTURE OF THESE REASONS FOR VERDICT
[30] This was a lengthy trial conducted over seven weeks. I heard evidence from
37 witnesses on behalf of the Crown and evidence from Mr Borlase. A further nine formal statements were admitted by consent and taken as read. The Crown produced thousands of exhibits (in electronic format). The defendants, and in particular Mr Borlase, also produced a large number of documentary exhibits.
[31] Given the extent of the evidence and documents, I have structured the balance of my Reasons for Verdict as follows:
(a) First, I deal with various evidential issues arising in this case.
(b)Second, I address the legal principles in relation to the bribery and corruption and dishonest use offences. Save for one matter in relation to the bribery and corruption charges, there is no dispute as to the elements of each offence.
(c) Third, I set out a chronological overview of the main events occurring in each of the three charging periods.
(d)Fourth, I address certain factual matters or events that feature across all charging periods, by topic. This includes the process for setting budgets at RDC and Auckland Transport; delegated financial authorities; and the gift policies/registers at RDC and Auckland Transport.
(e) Fifth, I address the evidence in relation to the benefits and gifts provided by Projenz to RDC and Auckland Transport employees other than Mr Noone and Mr George (which do not form part of the charges against Mr Noone and Mr Borlase).
(f) Sixth, I turn to the particular charges against Mr Noone and Mr Borlase. I deal first with the evidence relating to Mr Noone’s consultancy services and invoices. This relates to three of the charges against Mr Noone (charges 1, 2 and 6) and three of the charges against Mr Borlase (charges 1, 2 and 3).
(g)Seventh, I address the other benefits provided by Projenz to Mr Noone, to which the remaining three charges against Mr Noone relate (charges 3, 4 and 5), and three of the remaining charges against Mr Borlase (charges 4, 5 and 6).
(h)Eighth, I deal with the various gifts and benefits provided by Projenz to Mr George, to which two of the further charges against Mr Borlase relate (charges 7 and 8).
(i)Finally, I address the charges against Mr Borlase in respect of the alleged inflation of invoices (charges 9, 10, 11 and 12).
C. EVIDENTIAL ISSUES
[32] As this is a Judge alone trial, it is appropriate that I remind myself of the following matters on which I would have in all likelihood directed a jury. It is also important that I bear these matters in mind at all times when considering the evidence that I heard during the course of the trial.
Burden and standard of proof
[33] The starting point is that each of Mr Noone and Mr Borlase is presumed innocent unless proved guilty. The Crown, and the Crown alone, is required to prove that each of Mr Noone and Mr Borlase is guilty of the charges against them. In particular, the Crown must prove each element of each charge against Mr Noone and Mr Borlase before I may enter a verdict of guilty on that charge.
[34] Mr Borlase gave evidence at the trial. He did not have to do so. The fact he gave evidence does not change who was required to prove the allegations. That remains with the Crown, and I remind myself that there is no onus on Mr Borlase or Mr Noone to prove their innocence.
[35] Mr Borlase’s evidence forms part of the overall pool of evidence. If I consider a factual scenario on which either defendant relies to be reasonably possible, I must give the defendant the benefit of the doubt in relation to that issue. This was a point Mr Lance emphasised in his closing address for Mr Noone. In addition, in the event I decline to accept all or any part of Mr Borlase’s evidence, I will put that evidence to one side. I will then still need to determine on the balance of the evidence whether the Crown has discharged the onus of proof to the required standard. In short, I must be careful not to “shift” the burden of proof.
[36] Mr Noone did not give evidence. I do not draw any inference, adverse or otherwise, from that. He is perfectly entitled to put the Crown to proof in respect of each charge.
[37] As to the standard of proof, that is of course proof beyond reasonable doubt. There is also no question that it is a very high standard. It is not enough for the Crown to persuade me that Mr Borlase or Mr Noone is probably guilty, or very likely guilty. Equally, it is virtually impossible to prove anything to an absolute or mathematical certainty when dealing with the reconstruction of past events. In essence, I must be sure that each of Mr Borlase and Mr Noone is guilty of any particular charge before I may enter a verdict of guilty in relation to it. If I have an honest and reasonable uncertainty left in my mind about the guilt of either Mr Noone or Mr Borlase on any of the charges, after giving thorough and impartial consideration to all the evidence, I must enter a verdict of not guilty in respect of that charge.
[38] The Crown is not bound to prove each factual contention beyond reasonable doubt. Rather, it is the cumulative weight of all the evidence that must prove each of the elements of each charge beyond reasonable doubt. As the Court of Appeal said in R v Thomas, “it is the totality of [the] narrative to which the formula ‘beyond reasonable doubt’ applies…”.2
Inferring intent/defendant’s state of mind
[39] Offences pursuant to ss 105 and 228(b) of the Crimes Act 1961 each contain express elements concerning the defendant’s state of mind or belief at the time of the alleged offending.
[40] A fact finder will often be asked by the Crown to infer that a defendant had the requisite state of mind as required by the elements of the particular offence. As stated by the Court of Appeal in R v Coleman:3
… obviously one cannot see into another's mind. The fact finder must draw inferences as to the accused's state of knowledge from facts proved. The
2 R v Thomas [1972] NZLR 34 (CA) at 38.
3 R v Coleman CA180/04, 15 December 2004 at [12].
drawing of inferences inevitably involves the application of common sense and of the fact finder's knowledge of the world and of how it works to proved facts.
[41] In R v Goyen, the Court of Appeal approved the following jury direction:4
This process of inference can often be important where a person's state of mind or intention is involved because a man's proven actions are often a good basis on which to draw inferences about his accompanying intentions, what he had in mind at the time those actions occurred.
[42] A fact finder may also be asked to infer that a defendant had the requisite state of mind despite evidence from the defendant to the contrary. As observed by Windeyer J in the High Court of Australia:5
If an accused gives evidence of what his intentions were, the jury must weigh his testimony along with whatever inference as to his intentions can be drawn from his conduct or from other relevant facts. References to a “subjective test” could lead to an idea that the evidence of an accused man as to his intent is more credible than his evidence of other matters. It is not: he may or may not be believed by the jury. Whatever he says, they may be able to conclude from the whole of the evidence that beyond doubt he had a guilty mind and a guilty purpose.
[43] Finally, I refer to the observations of Randerson J in Burgess v Field, a case concerning s 103 of the Crimes Act (bribery and corruption of a Member of Parliament). 6 The Judge said that the parties’ intentions in cases such as this are most likely to be established by inference from the facts and surrounding circumstances.7 This observation was also adopted and endorsed by French J in
another case concerning s 105, R v Connolly.8
[44] These observations are particularly relevant in this case. Mr Borlase gave evidence as to his state of mind at the relevant times. I must consider his evidence, in conjunction with all relevant facts I find to have been reliably established, and the logical inferences one can draw from them. Mr Noone did not give evidence, so his state of mind for the purposes of s 105(1) can only be inferred from the facts as
reliably established.
4 R v Goyen CA285/05, 1 May 2006 at [47].
5 Vallance v The Queen (1963) 108 CLR 56 at 83.
6 Burgess v Field HC Auckland CIV 2007-404-3206, 5 October 2007.
7 At [17].
8 R v Connolly HC Christchurch CRI-2008-009-14401, 31 July 2009, at [38].
Documentary evidence
[45] Mr Dickey, for the Crown, emphasised in his opening address that the documentary record in this case would be particularly instructive. Many of the events in question took place many years ago, some as long as ten or more years ago. The contemporaneous documentary record in this case did assist in piecing together relevant events and their timing.
[46] However, while the documentary record in a case such as this is obviously of considerable assistance, I must remind myself that I need to consider all of the evidence presented, including witnesses’ evidence of their recollections and, importantly, contextual evidence that was provided in relation to particular documents. This is particularly so in relation to a number of email communications which the Crown presented as “key emails”. I am conscious of the need to put those individual communications in their proper context when assessing what weight, if any, I give to them. In short, I need to be alive to the risk of taking communications in isolation and accordingly out of their proper context. Certainly in respect of some of those “key emails”, I decline to draw the inferences suggested by the Crown.
Reliability issues – s 122
[47] I have also considered evidence which may be unreliable, in the context of s 122 of the Evidence Act 2006. As a general observation, and as I would have done in the case of a jury, I remind myself of the need for caution in assessing the weight to be given to particular evidence where the events in question occurred very many years ago. This is particularly the case where, for example, witnesses in this case were asked to recall specific details such as particular attendees at lunches, dinners and other functions that occurred many years ago, or specific dates when events took place.
Evidence of benefits to RDC/Auckland Transport employees other than Mr
George and Mr Noone
[48] A significant amount of evidence was offered by Crown witnesses of benefits and gifts provided by Projenz to employees at RDC and Auckland Transport other than Mr Noone or Mr George. The provision of those benefits and gifts is not the
subject of any charges against Mr Noone or Mr Borlase. Mr Mansfield rightly noted in his closing that the Crown had not clearly articulated the basis upon which this evidence should be treated, and that it seemed to be offered as evidence of a propensity on the part of Mr Borlase to try to corrupt other officials.
[49] There was no objection taken by either defendant as to the admissibility of any of this evidence. The evidence certainly formed part of the narrative or backdrop to the particular benefits that are the subject of the charges. Many aspects of that evidence concerned benefits and gifts very similar to, or the same as, the various gifts and benefits provided to Mr Noone and Mr George (for example, taxi chits; hotel accommodation; overseas and domestic travel for personal reasons; overseas and domestic travel and accommodation for conferences; and the provision of mobile phones). In addition, the reasons given by Mr Borlase as to why certain benefits were provided to RDC or Auckland Transport employees (namely as a gesture of goodwill or on compassionate grounds) were the same reasons given for why certain benefits were provided to Mr George and Mr Noone. In my view, the evidence would have been appropriately classed as propensity evidence, in terms of demonstrating that Mr Borlase had a tendency to act in a particular way or have a
particular state of mind.9 On its own, such evidence cannot, of course, prove a
particular charge. It is simply further evidence I can take into account in deciding whether, in light of all the evidence in this case, the Crown has proved a charge beyond reasonable doubt. When considering this evidence, I remind myself of the potential dangers of propensity reasoning: obviously the mere fact that a defendant has engaged in conduct on more than one occasion does not itself establish guilt.
[50] Moreover, all parties relied on this evidence as part of the narrative to the charges. The Crown said it showed a culture of corruption, being the context in which the specific benefits were provided to Mr Noone and Mr George. The defence said it showed a culture of collaboration and a “one team” approach, and that the
provision of such benefits was “industry standard” at the time.
9 Evidence Act 2006, s 40(1)(a).
Mr George’s evidence
[51] As noted earlier, Mr George pleaded guilty to related charges and gave evidence for the Crown. I assessed him carefully as a witness as he was giving evidence. Unfortunately, I conclude that I cannot place significant weight on Mr George’s evidence, unless it is corroborated by evidence from another witness or contemporaneous documents.
[52] Mr George’s responses to questions put to him, both in evidence-in-chief and cross-examination, were often long and did not answer the question. I am not suggesting that in all cases Mr George was seeking to avoid answering the question, but the task of giving evidence in the particular circumstances in which he now finds himself was clearly difficult for him. Moreover, despite having pleaded guilty to charges concerning events in this matter, he often sought to justify or minimise his actions, or distance himself from events. In addition, when questioned about the gifts and benefits he had received, his approach was often to respond that if it was one of the charges to which he had pleaded guilty he “accepted it”, without offering any real evidence by way of his recollection of past events.
[53] Mr Dickey acknowledged in his closing address that Mr George was not a particularly reliable witness, absent corroborating evidence.
Mr Penman’s evidence
[54] Mr Penman was Mr Borlase’s fellow director and shareholder of Projenz, until he resigned from the business at the end of 2012. A key part of his evidence was that he was aware that Mr Noone was providing consultancy services to Projenz over the period 2006 to 2013, albeit his knowledge was indirect, only via discussions and reports from Mr Borlase.
[55] I regret to say that I did not find Mr Penman a particularly reliable witness.
[56] I am conscious that Mr Penman and Mr Borlase have had a close business relationship, and indeed friendship, since at least the late 1990s, such that it is inevitable, in my view, that he would wish to support his long-standing business
partner and friend in the current circumstances. That is not to say that I reject Mr Penman’s evidence in its entirety or consider that he lied when giving evidence; but I certainly observed a desire on his part to put a “spin” on his evidence that favoured Mr Borlase. Further, when confronted with details around Mr Noone’s consultancy services to Projenz over the latter part of the charging periods, he was not able to offer a credible, or indeed on some matters, any, answer to the questions put to him. I address my findings in relation to Mr Penman’s evidence in more detail later in these Reasons for Verdict.
Evidence from other Projenz employees/consultants
[57] I observed that a number of the Crown witnesses, particularly long standing Projenz employees or sub-consultants, appeared reluctant to be giving evidence for the Crown. Again, I do not suggest they lied when giving evidence. However, I sensed a real reluctance on their part to offer evidence that they thought might be unhelpful to Mr Borlase, and they were quick to accept propositions put to them in cross-examination by counsel for Mr Borlase (which in some cases, was somewhat inconsistent with their evidence-in-chief). For these reasons, and like Mr Penman’s evidence, I also treat their evidence with some caution.
Mr Borlase’s evidence
[58] As noted, Mr Borlase gave evidence. He did so over a number of days and was subject to lengthy cross-examination by the Crown. He came across as an intelligent and articulate witness.
[59] In the main, however, I did not find Mr Borlase to be a credible witness. The main reason for this was that, in seeking to explain the various payments and provision of benefits, his evidence often flew in the face of common sense and logic. For example, he resolutely maintained his position that there was no conflict of interest between Mr Noone’s various roles at RDC and Auckland Transport and the (purported) provision by Mr Noone of significant and ongoing consultancy services to Projenz (a supplier of services to RDC and Auckland Transport), for which Mr Noone was paid substantial sums. He maintained this position even in the context of the two formal tender processes at RDC and Auckland Transport. His
evidence in this regard contrasted with the evidence of a range of other witnesses. A more realistic approach was taken in the closing address for Mr Noone, in that it was accepted that there was at least a “potential” conflict of interest and that in hindsight, it would have been preferable for Mr Noone to have disclosed his consultancy relationship with Projenz to his employers.
[60] Another aspect of Mr Borlase’s evidence that was not credible was his explanation for there being no documentary “work product” of Mr Noone’s consultancy to Projenz over the period 2006 to 2013. He said that Projenz was anti- bureaucratic and he preferred verbal reports rather than written advice. I accept that the provision of advice by professional consultants is likely to take a variety of forms, depending on the nature of the particular advice being sought and given. The advice could be provided in verbal or written form, and in the case of the latter, by way of lengthy and detailed reports, or short summary emails. However, Mr Borlase’s suggestion that the entirety of Mr Noone’s output of his consultancy services to Projenz, over a period of some seven years, was verbal advice defies common sense.
[61] A further aspect of Mr Borlase’s evidence that I did not find credible was his explanation why Projenz paid for a range of personal benefits provided to RDC employees, including Mr George and Mr Noone. This was generally explained as being a “goodwill gesture”, or on compassionate grounds.
[62] In short, Mr Borlase’s evidence as to why these personal benefits were funded by Projenz was implausible. It begs the obvious question of why a significant supplier of services to RDC and Auckland Transport would be willing to spend very substantial sums of money on RDC and Auckland Transport employees’ personal travel and other benefits, merely as a “gesture of goodwill”.
[63] Finally, Mr Borlase gave evidence in respect of a number of the “key emails” relied on by the Crown. As noted above, individual emails need to considered in their context. However, Mr Borlase’s evidence as to the meaning and content of some of these emails was strained to say the least.
D.BRIBERY AND CORRUPTION OF AN OFFICIAL – LEGAL PRINCIPLES
The overall scheme of ss 100-105
[64] Sections 100 to 105 of the Crimes Act broadly deal with bribery and corruption of and by judicial officers (ss 100 and 101); Ministers of the Crown (s 102); members of Parliament (s 103); law enforcement officials (s 104); and officials (s 105).
[65] Happily for New Zealand’s international reputation, there is a relative dearth of case law under these provisions. The leading decision is that of the Supreme Court in Field v R.10 That case concerned charges against a member of Parliament, and hence s 103(1) of the Crimes Act. However, the Supreme Court stated:11
These sections [i.e. ss 100 to 105] generally follow the same model as s 103 in the sense that the definition of the offences committed by those in official positions is broad enough to encompass acceptance of gratuities, whereas offences committed by those who provide or offer bribes are defined in terms similar to those employed in s 103(2) and thus do not encompass gratuities.
[66] The Supreme Court’s judgment accordingly provides helpful guidance on the proper approach to be taken to s 105.
[67] Section 105 provides as follows:
105 Corruption and bribery of official
(1) Every official is liable to imprisonment for a term not exceeding
7 years who, whether within New Zealand or elsewhere, corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, any bribe for himself or herself or any other person in respect of any act done or omitted, or to be done or omitted, by him or her in his or her official capacity.
(2) Every one is liable to imprisonment for a term not exceeding 7 years who corruptly gives or offers or agrees to give any bribe to any person with intent to influence any official in respect of any act or omission by him or her in his or her official capacity.
10 Field v R [2011] NZSC 129, [2012] 3 NZLR 1.
11 At [23].
[68] Save for one matter, concerning the proper approach to the requirement in s 105(2) that any bribe must be given or offered “with intent to influence” (discussed below), the parties agreed as to the elements of the offences.
Section 105(1) elements
[69] The constituent elements of the offence are as follows: (a) The defendant must be an “official”;
(b)The defendant must have accepted or obtained, or agreed or offered to accept or attempted to obtain a “bribe” (as defined by s 99) for him or herself or any other person;
(c) The conduct at (b) above must have been carried out “corruptly”; and
(d)The corrupt conduct in (b) above must have been in respect of any act done or omitted, or to be done or omitted, by him or her in his or her official capacity.
“Bribe”
[70] “Bribe” is defined in s 99 of the Crimes Act as follows:
bribe means any money, valuable consideration, office, or employment, or any benefit, whether direct or indirect
[71] As noted by the Court of Appeal in Field v R,12 the definition departs from the normal meaning of the word in the sense that it is value neutral, as compared with the usual connotations.
[72] The Crown’s case is that Mr Noone accepted and obtained bribes, rather than simply agreeing to, offering to accept or attempting to obtain them. The most significant aspect of the Crown’s case against Mr Noone is the payment by Projenz
of invoices rendered to Projenz by Mr Noone’s consulting company, MJ Noone &
12 R v Field [2010] NZCA 556, [2011] 1 NZLR 784, at [45].
Partners Ltd (which later changed its name to Preside Consulting Ltd). As such, the payments were not made directly to Mr Noone himself. However, the offence captures the acceptance of bribes by the official themselves, or “for any other person”, which would include a corporate entity.13 This makes sense, as otherwise corrupt officials could shelter their offending behind a corporate vehicle.
[73] I also consider that s 105(2) covers the payment of bribes by a person through or via a corporate entity. If it did not, then corrupt payers of bribes would also be able to shelter behind a corporate entity. In this case, the bribes were invariably paid for by Projenz (though sometimes by way of reimbursement to Mr Borlase, who had originally paid for them with his personal credit card). There was ample evidence that where Projenz had paid the bribe, it was at Mr Borlase’s instruction and with his authority. Mr Borlase did not dispute this.
“Official”
[74] There was no suggestion by either defendant that Mr Noone and Mr George were not “officials” while employed at RDC and then Auckland Transport. I will nevertheless briefly address this element, though it is abundantly clear to me that they were each an “official” in both roles.
[75] Section 99 of the Crimes Act 1961 defines “official” as including “…any member or employee of any local authority or public body…”
[76] There can be no dispute that RDC was a local authority and, therefore, that Mr George and Mr Noone were “officials” while employed there. Auckland Transport is not a local authority so the question is whether it falls within the wider definition of “public body”. The Act does not define the term “public body”, so the ordinary principles of statutory interpretation apply.14
[77] In Auckland/Waikato Fish and Game Council v De John, the Court compared
and contrasted the dictionary definitions of “public” and “private” and held that the
appellant in that case would be a public body if it “… turns out to be a group of
13 See also the definition of “person” in s 2 of the Crimes Act.
14 Interpretation Act 1999, s 5(1).
individuals which by its origins is ultimately answerable to the community at large or which by its functions has the power to exercise legal controls over the activities of the community at large”.15
[78] In DPP v Manners (Ernest), the House of Lords considered that a Gas Board was within the definition of “public body” in relation to corruption charges, by reference to the fact that it carried out duties for the benefit of the public rather than for private profit.16
[79] Auckland Transport is a creature of statute. It carries out its duties for the benefit of the public,17 is subject to certain legislation “as if [it] were a local authority”,18 and exercises public powers.19
[80] The provisions of Part 5 of the Local Government Act 2002 also support the view that Auckland Transport is a public body. First, public consultation was required before AT could be established.20 Second, the principal objective of Auckland Transport includes exhibiting a sense of social and environmental responsibility by “having regard to the interests of the community”.21 Third, Auckland Transport is not entitled to give any guarantee, indemnity or security (a restriction that would be unusual if it were a private body).22 Fourth, despite sections 207P to 207V of the Companies Act 1993, Auckland Transport is a public entity as defined in s 4 of the Public Audit Act 2001 and, in accordance with that Act, the Auditor-General is its auditor.23 Fifth, Auckland Transport has the ability to exercise legal controls over the activities of the Auckland community by way of
prosecuting stationary vehicle infringements.24
15 Auckland/Waikato Fish and Game Council v De Johns HC Hamilton AP88/91, 16 December
1991 at 9.
16 DPP v Manners (Ernest) [1978] AC 43 (HL) at 49-50.
17 Local Government (Auckland Council) Act 2009, s 39.
18 Local Government (Auckland Council) Act 2009, s 42.
19 Local Government (Auckland Council) Act 2009, s 46.
20 Section 56.
21 Section 59(1)(c).
22 Section 62.
23 Section 70.
24 Section 46(1)(a).
[81] Accordingly, I consider that Auckland Transport is a public body and that
Mr Noone and Mr George, while employed by it, were each an official.
“Corruptly”
[82] The meaning of “corruptly” is now well settled, given the Supreme Court’s
decision in Field v R.
[83] The Supreme Court endorsed the tests for “corruptly” that had been adopted by both Rodney Hansen J (the trial Judge) and Randerson J (when granting leave to prosecute Mr Field).
[84] In his summing up to the jury, Rodney Hansen J said that, in order to prove that Mr Field had acted “corruptly”, he:25
… must have known or believed that the work done on his property was done because he had provided or it was anticipated that he would provide immigration services.
[85] The Supreme Court stated that the same test was encapsulated in
Randerson J’s pre-trial description of “corruptly”,26 namely:
[47] … he deliberately accepted the [services provided] knowing or believing that [their provision] was intended to influence or reward him in respect of assistance given (or to be given) by him in his capacity as a member of Parliament.
[86] Reflecting the above, the Supreme Court concluded that in order to establish that Mr Field had acted “corruptly”, the Crown must establish that he:27
… knew that the [benefits] he received were provided in connection with the immigration assistance he gave…
[87] If the Crown was able to satisfy that test, the Supreme Court said that Mr Field would have “knowingly engaged in conduct which the legislature regards as corrupt”.28 In terms of the policy behind such an approach, the Supreme Court
said that “it is simply wrong for an official to accept money or like benefits in return
25 Quoted in R v Field, above n 15, at [8].
26 At [11].
27 At [66].
28 At [66].
for what has been done in an official capacity”.29 The Court accordingly made it clear that the Crown need not prove any improper act on the part of the official concerned.
A “de minimis” exception
[88] The Supreme Court was alive to the fact that the wide scope of the provision carries a risk of criminalising activity that involves unexceptional token gifts or other benefits. The Court accordingly said the following:30
…if there is an exception, it must address the extent of the gift and the particular context in which it occurs. We consider, therefore, that there must be a de minimis defence in relation to gifts of token value which are just part of the usual courtesies of life.
[89] In that case, the benefits received by Mr Field (around $50,000 worth of free tiling services) were not considered de minimis and thus fell outside the exception.
[90] Although the de minimis exception was framed in the context of s 103(1) of the Crimes Act, i.e. involving the receipt of a bribe, I can see no reason why it would not also be available under s 103(2) (and accordingly s 105(2) in this case), involving the giving of a bribe. I do not consider the legislature (or the Supreme Court) would have intended the relevant official to benefit from such an exception, but the “giver” of the bribe to nevertheless be guilty of an offence. The de minimis exception becomes relevant in this case given the sheer range and value of the various benefits said to have been provided by Projenz to Mr Noone and Mr George. I am mindful of the Supreme Court’s observation that when considering the exception, both the value of the gift and the particular context in which it occurs must be addressed.
Inducements v gratuities
[91] The Supreme Court’s judgment in Field v R primarily focused on whether the
receipt of a “gratuity” fell within the scope of s 103(1). A gratuity is the provision of
a benefit after the official act has been carried out, without an antecedent promise or
29 At [59].
30 At [65].
agreement that the benefit will be provided if the official act is carried out. This is in contrast to an inducement. An inducement, as it suggests, is the offering or agreement to provide (and receipt or agreement to accept) a benefit as an inducement to an official act being carried out at some time in the future. As such, an inducement must occur (or be agreed upon) prior to the official act being carried out.
[92] The issue arose in the Field case given the trial Judge had left it open to the jury to find Mr Field guilty if he received the tiling services after the provision of immigration advice, and irrespective of any antecedent agreement (or offer) that the tiling services would be provided. The issue on appeal was whether the trial Judge was right to have done so.
[93] The Supreme Court found that s 103(1) captures the provision of gratuities. It reached this conclusion having traversed the wording of the provisions themselves, their legislative history and the policy behind them.
Section 103(2) is narrower – it does not encompass gratuities
[94] In Field v R, the Supreme Court noted that s 103(2) was drafted in distinctly narrower terms than s 103(1), in that it contains the additional element of an “intent to influence”. As such, the Court observed that:31
The narrower drafting of s 103(2) means that an offence is only committed in respect of the provision of benefits or the making of offers and agreements which are intended to influence, and thus must logically precede, the relevant official acts.
[95] Having referenced ss 100 to 105 of the Crimes Act, and that they follow the same model as s 103, the Court said:32
… the definition of the offences committed by those in official positions is broad enough to encompass acceptance of gratuities, whereas offences committed by those who provide or offer bribes are defined in terms similar to those employed in s 103(2) and thus do not encompass gratuities.
31 At [21].
32 At [23].
The proper approach to “intent to influence”
[96] In his closing address, Mr Mansfield urged me to find that s 105(2) is even narrower again, in that, unlike s 105(1), it requires an intent on the part of the person offering or giving the bribe to influence the official to carry out an improper act. Counsel submitted that I could draw some comfort in reaching this conclusion from the reformulated UK bribery law, namely the Bribery Act 2010 (UK). Its provisions require, inter alia, the intent to induce an official to “perform improperly a relevant function or activity”. Mr Mansfield also submitted that Mallon J’s decision in R v
Hutt is consistent with this approach. 33
[97] I do not agree with the approach suggested by Mr Mansfield. There are four reasons for this.
[98] The first necessitates an explanation of the legislative history of the provisions in question. Helpfully, that legislative history was examined in some detail by the Supreme Court in Field v R. I summarise that discussion below.
[99] The Supreme Court traced the development of ss 100–105 of the Crimes Act
1961 to s 2 of the Corrupt Practices Prevention Act 1854 (UK).34 The Court observed that this provision was the model for other legislative provisions which were more directly copied when enacting s 103 (and the other related bribery and corruption provisions of the Crimes Act).35
[100] Section 2 of the Corrupt Practices Prevention Act 1854 made it a misdemeanour to offer a benefit to a voter in order to induce that voter to vote or refrain from voting and as well, “corruptly” to provide a benefit “on account of any such voter having voted or refrained from voting at an election”. The two aspects of the provision cover, first, an inducement (which must precede the act of voting) and a benefit on account of the voter having voted (or having refrained from doing so),
which self-evidently is provided after the act of voting.
33 R v Hutt [2012] NZHC 593.
34 Corrupt Practices Prevention Act 1854 (UK) 17 & 18 Vict c 102.
35 At [25].
[101] Subsequently, s 1(1) of the Public Bodies Corrupt Practices Act 1998 (UK)36
provided as follows:
Every person who shall by himself or by or in conjunction with any other person, corruptly solicit or receive, or agree to receive, for himself, or for any other person, any gift, loan, fee, reward, or advantage whatever as an inducement to, or reward for, or otherwise on account of any member, officer, or servant of a public body as in this Act defined, doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed, in which the said public body is concerned, shall be guilty of a misdemeanour.
[102] The Supreme Court noted that s 1(2) was in mirror terms, in respect of the provision of benefits in the circumstances provided for in s 1(1). The Supreme Court observed that s 1(1) of the Public Bodies Corrupt Practices Act 1998 was similar to the provisions in the Corrupt Practices Prevention Act 1854, in terms of the alternative ways in which the offence could be committed, i.e. either by way of an inducement or a reward.37
[103] In New Zealand, ss 108 and 110 of the Criminal Code Act 1893 provided as follows:
108 Judicial Corruption —
Every one is liable to fourteen years’ imprisonment with hard labour who, —
(1) Holding any judicial office, corruptly accepts or obtains, or agrees to accept or attempts to obtain, for himself or any other person, any bribe, that is to say, any money or valuable consideration, office, place, or employment whatever, on account of anything already done or omitted, or to be afterwards done or omitted, by him in his judicial capacity; or
(2) Corruptly gives or offers to any person holding any judicial office, or to any other person, any such bribe as aforesaid on account of any such act of omission.
110 Selling offices —
Every one is liable to seven years’ imprisonment with hard labour who —
(1) Corruptly accepts or obtains, or agrees to accept or attempts to obtain, for himself or any other person, any money or valuable consideration whatever on account of his having appointed to, or having procured or attempted to procure for, or in consideration that
36 Public Bodies Corrupt Practices Act 1889 (UK) 52 & 53 Vict c 69.
37 At [36].
he will appoint to, or procure or attempt to procure for, any person, any public office or employment; or
(2) Corruptly gives or offers to give to any person any money or valuable consideration whatever on any such account or consideration.
[104] The Supreme Court said that these sections followed, broadly at least, the scheme of the UK 1854 Act, in terms of capturing before and after the event benefits.38
[105] Sections 126 and 128 of the Crimes Act 1908, being the next iteration of the provisions, were said by the Supreme Court to be in materially similar terms to ss 108 and 110.39
[106] Finally, ss 100 to 105 of the present Crimes Act were enacted. The explanatory note to the Crimes Bill 1961 said:40
Clauses 102 and 103 replace section 128 of the 1908 Act, which makes it an offence to corruptly take a bribe in consideration of procuring or attempting to procure the appointment of any person to any public office or employment. These clauses, which are based on section 100 of the Canadian Criminal Code (1954), are wider in their effect. They make it an offence for a Minister of the Crown to corruptly take a bribe for any act done in his capacity as a Minister; for a member of Parliament to corruptly take a bribe for any act done in his capacity as a member; and for anyone to corruptly give such a bribe. No one is to be prosecuted under these clauses without the leave of a Judge of the Supreme Court.
(Emphasis added)
[107] Section 100 of the Canadian Criminal Code (1954),41 as referenced in the above extract from the explanatory note, provided as follows:
(1) Bribery of judicial officers, etc. — Every one who
(a) being the holder of a judicial office, or being a member of the Parliament of Canada or of a legislature, corruptly
(i) accepts or obtains, (ii) agrees to accept, or
38 At [38].
39 At [39].
40 Crimes Bill 1961 (82-1) (explanatory note) at xvi.
41 Currently the Criminal Code RSC 1985 c C-46, s 119.
(iii) attempts to obtain,
any money, valuable consideration, office, place or employment for himself or another person in respect of anything done or omitted or to be done or omitted by him in his official capacity; or
(b) gives or offers corruptly to a person who holds a judicial office, or is a member of the Parliament of Canada or of a legislature, any money, valuable consideration, office, place or employment in respect of anything done or omitted or to be done or omitted by him in his official capacity for himself or another person,
is guilty of an indictable offence and is liable to imprisonment for fourteen years.
(2) Consent of Attorney General — No proceedings against a person who holds a judicial office shall be instituted under this section without the consent in writing of the Attorney General of Canada.
[108] The Supreme Court in Field v R said that the bribery and corruption provisions in the Crimes Act clearly owe much to the above Canadian section. It noted, however, that the offence of giving or offering a bribe in s 100(1)(b) of the Canadian legislation was more widely drafted than the corresponding sections in the New Zealand legislation – in that it did not contain the additional element of “intent to influence”. The Supreme Court saw this as adding weight to the conclusion that s
103(2) does not include gratuities, whereas s 103(1) does. 42
[109] Mr Mansfield is correct when he submits that the Supreme Court in Field v R did not expressly address what is required by the “intent to influence” element in s 103(2) (and thus s 105(2)). However, nowhere in the Supreme Court’s discussion of the distinction between ss 103(1) and (2) is there any suggestion that s 103(2) is narrower than s 103(1) because it does not capture gratuities and it requires an intent to influence an official to carry out an improper act. Nor is any such distinction seen in any of the legislative history of the present bribery and corruption provisions. As can be seen from the above extracts from the earlier statutory provisions, the distinction has historically been drawn solely between before and after the event
benefits, rather than between proper and improper acts. If the latter distinction was
42 At [45].
intended, it would have been relatively straightforward to have included wording to that effect.
[110] The second reason I reject the approach suggested by Mr Mansfield is that the reliance on the current UK provisions is misplaced. It is correct that those UK provisions require an improper act on the part of the official concerned. However, the Supreme Court in Field v R made it clear that the drafting style of the Bribery Act 2010 (UK) is so different from s 103 (and thus the historical provisions
discussed above) as to be “of no particular relevance in the present context”.43
[111] Moreover, as the Supreme Court in Field v R also explained:44
The [UK] Law Commission remained concerned about the possibility of legislative over-reach in relation to advantages of minor value but considered that the risk of this could be dealt with by a more intense focus on the wrongfulness of the actions of the intended recipient. And, at the same time, it adopted a broad approach to when such actions might be wrongful. Under this approach, which was distinctly broader than that proposed in the earlier report, the receipt of a benefit may be all that is required to render the actions of the official wrongful. By way of illustration, the Commission postulated a case – not very far removed from the present – of a government official issuing a visa to someone and then accepting from that person a gift of £1,000 as an expression of gratitude. The Commission considered that the payment and receipt of the money in those circumstances should be subject to the criminal law. The revised recommendations of the Law Commission were eventually enacted as the Bribery Act 2010 (UK) with the example just discussed provided for, perhaps slightly awkwardly, by ss
1(3)(b) and 2(3)(b).
[112] Accordingly, the UK statute’s requirement for an “improper” act was to guard against legislative over-reach. As confirmed in Field v R, the safeguards against legislature over-reach in the New Zealand context is the requirement for consent prior to any prosecution and, importantly, the de minimis exception as formulated by the Supreme Court.
[113] Third, I do not see Mallon J’s observations in R v Hutt as supporting the
defendant’s position on this issue.45 In that case, the defendant sought a discharge under s 347 of the Crimes Act on two of four charges brought under s 105(2). The
43 At [36].
44 At [58] (footnotes omitted).
45 R v Hutt, above n33.
basis for the application was that there was no evidence that, prior to the official act in question (the recommendation of a particular site for lease – being the defendant’s site), there had been any offer or agreement in respect of the benefit that was later paid. The official gave evidence and said that the prospect of a later payment was not an “additional influencing factor” in his recommendation on the lease site. The defendant argued that the “after the event” payment was accordingly a gratuity only, and thus fell outside the scope of s 105(2).
[114] Mallon J declined the s 347 application. She accepted the Crown’s submission that once the agreement to make the payment had been made, it was irrelevant that the official would have recommended the lease site to his superiors, even without the payment. Further, Mallon J found that there was sufficient evidence from which the fact finder at trial could infer an understanding between the official and the defendant prior to the lease site recommendation.
[115] At [39] of her judgment, Mallon J referred to the Supreme Court’s discussion of the distinction between ss 103(1) and 103(2), namely that the latter does not include gratuities. There is no suggestion of any other distinction between the two provisions.
[116] Mr Mansfield pointed in particular to the Judge’s comments that:
[48] Providing the payment (the giving) was made pursuant to an offer or agreement that it would be paid, and the offer or agreement was with the intent to influence the official, then the payment is part of the transaction which has been made with the intent to influence. Or to put it another way, the payment is causally connected to the performance of the official acts and the payer and the official knew this when the official acts were carried out.
[117] In his closing address, Mr Mansfield submitted that the improper act in that case was that the official “fettered his discretion” by not considering other options for the lease.
[118] However, I consider Mallon J’s observations are consistent with there being no separate requirement in s 105(2) for the party providing or offering the benefit to intend that the official acts improperly, in terms of departing from their duty or
otherwise acting in a dishonest manner. What is “improper” is the payment being causally connected to the performance of the official acts – and the payer and official knowing that fact when the official acts are carried out.
[119] It is true that the common law position requires the person making the offer or providing the benefit to seek dishonest conduct on the part of the official.46
However, as stated by the Court of Appeal in Field v R:47
…the idea that s 103 imports the common law must be approach cautiously. An offence could conceivably mirror or reflect the common law, but the present provision patently does not.
[120] The Court of Appeal also said that the Crimes Act is a code and must be interpreted on its own terms, in its statutory context.48 The Supreme Court’s judgment did not alter or undermine these observations.
[121] Fourth, if s 105(2) required an intent to influence an official to carry out an improper act, it would, in my view require an analysis of a counterfactual scenario to determine whether the act was or was not improper. Take a simple example. Party A pays Official B $1,000 in the hope of influencing Official B to award a contract to Part A, rather than to any other entity that has tendered for the contract. Official B might have awarded the contract to Party A in any event, absent the payment. Awarding the contract to Party A is therefore not an improper act in and of itself, as it would have come about in any event.
[122] I do not consider the statutory provisions envisaged such an analysis when determining whether the offence has been made out. Using the example of a benefit being provided with the intent of influencing the outcome of a tender process, I do not consider the legislature intended the commission of the office to depend on whether the Crown could prove that the successful tenderer would not have otherwise won the tender. Such an approach would undermine the policy which sits
behind the legislation, as explained by the Supreme Court in Field v R at [59] - [63].
46 See, for example, those cases discussed by the Court of Appeal in Field v R at [67].
47 At [80].
48 At [69].
[123] Moreover, if an improper act by the official is required, the mere receipt by an official of benefits in connection with official acts is improper – as recognised by the Supreme Court in Field v R.49 If there is any causative link between the receipt of a benefit by an official and the carrying out of an official act, even where that act is, in and of itself, perfectly proper, then there is an improper act. Intending to bring about that state of affairs is an “intent to influence”. Official acts should come about utterly divorced from the earlier provision of, or an earlier offer or promise to provide, a benefit.
[124] For all of these reasons, I do not accept that s 105(2) requires an intent to influence an official to depart from his or her duty or act in some dishonest or immoral way. The legislature has deliberately cast the provisions in wide terms. The Supreme Court has confirmed the safeguards that protect against legislative over-reach.
[125] Finally, there was no dispute that the Crown does not need to prove any actual influence – Mr Mansfield accepted in his closing address that an intent to influence is sufficient. Nevertheless, the absence of proof of any actual influence may be evidentially relevant to the question of whether there was an intent to influence in the first place. The absence of proof of any actual influence may also be relevant to sentencing.
Official acts
[126] The final element of the offence is that any benefits must have been provided in connection with any act done or omitted, or to be done or omitted, in the official’s “official capacity”.
[127] The charges against Mr Borlase and Mr Noone do not particularise any one or more specific acts done or to be done by Mr Noone or Mr George. Rather, the charges state that the various benefits were paid in connection with Mr Noone’s “management on behalf of [RDC/Auckland Transport] of work carried out by
Projenz”, and Mr George’s “dealing on behalf of [RDC/Auckland Transport] with
49 At [7].
work carried out by Projenz”. In the Crown’s opening, it was noted that Mr Noone had oversight of significant budgets in relation to transport and infrastructure and that both Mr Noone and Mr George could approve purchase orders and invoices in respect of Projenz’ work.
[128] Neither defendant raised any dispute in respect of the broader concept of the “management of” or “dealing with” Projenz’ work being an act done, or to be done, by Mr Noone or Mr George in their official capacity. Mr Lance, in his closing address, noted that there is nothing “concrete” that the Crown points to as the “act done” or “to be done” in Mr Noone’s official capacity (such as the immigration advice given by Mr Field in Field v R). Nevertheless, Mr Lance included in his summary of the elements that the Crown must prove the fact that “Mr Noone knew the payments were received to reward or influence him in respect of the
‘management’ of Projenz’ work”. Mr Mansfield did not directly address this point in his closing.
[129] Obviously there will be cases where a distinct act is pointed to in connection with charges under s 105; for example, the recommendation of a lease site;50 the couriering of drugs and other contraband into a prison by a prison guard;51 or the entering of false information into the WINZ computer systems to arrange for false benefits to be paid.52 However, there may be other cases where it is not possible to point to such a distinct act. This case is one of them. Another example is R v Connolly,53 in which a police officer was charged with receiving free sexual services in connection with the exercise of his police powers generally (i.e. rather than more specifically, such as to influence him not to issue a ticket).54
[130] I consider that the concept of an “act [or omission] done or to be done” is sufficiently flexible to capture the broader concept of the management of or dealings with Projenz’ work in each of Mr Noone’s and Mr George’s official capacity. At
least in respect of the common law position, the particular act or omission that is
50 R v Hutt, above n 33.
51 R v Clarke HC Wellington CRI-2009-085-7789, 2 June 2011.
52 R v Yang HC Auckland CRI-2008-004-17744, 26
53 R v Connolly, above n 8.
54 Although in that case, the officer was found not guilty by a jury on the s 104 charge.
expected to be done at the time the inducement is offered need not be specified in order for the offer to be corrupt.55
[131] This approach to an “act done or to be done” will capture cases of more insidious corruption of officials, where an official is effectively “on the payroll” of the paying party, with the intent that the official will “look after” the payer generally in their official capacity. Such cases are no less serious than cases of a distinct official act or event, and are arguably more damaging to society, given their ongoing and insidious nature.
E. DISHONEST USE OF A DOCUMENT – LEGAL PRINCIPLES Section 228(b) – elements
[132] The relevant provision at the date of charging in 2015 provided as follows:
228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,—
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.
[133] The Crown set out in its opening the following elements of the offence:
(a) The defendant used a document (in this case, invoices from Projenz to
RDC);
(b)The document was used with an intent to obtain a pecuniary advantage for the defendant or any other person (in this case, for Projenz);
(c) The document was used dishonestly; and
55 R v Allen (1992) 27 NSWLR 398 (NSWCCA).
(d) The document was used without claim of right.
[134] In his closing address, Mr Mansfield for Mr Borlase accepted the above elements and said that the element in dispute in this case is whether the documents were used dishonestly.
“Document”
[135] A document is defined in s 217 as “a document, or part of a document, in any form”, and specifically includes “any paper or other material used for writing or printing that is marked with matter capable of being read”. This would cover either a printed or emailed invoice.
“Use” of a document
[136] “Use” has been interpreted broadly, and has been held to include providing invoices.56 In addition, the Court of Appeal said in R v Thompson:57
The actus reus was the use by the accused of the document. Such use need not be by the accused in person: R v Paterson [1976] 2 NZLR 394 where this Court confirmed that where an offender deliberately uses an innocent agent to perform the actus reus of a crime the offender will generally be treated as principal in terms of s 66(1)(a) of the Crimes Act.
[137] In R v Gunthorp, the Court of Appeal said:58
It was not disputed that a person may “use” a document without directly handling it (cf R v Paterson [1976] 2 NZLR 394). An instruction or direction to deal with the document in a particular way will suffice.
[138] In this case, there was ample evidence of Mr Borlase’s direct involvement in the preparation of the invoices that were sent to RDC and which are the subject of the s 228 charges. In particular, Mr Borlase did not dispute that he had actually amended (by hand) drafts of each invoice to include additional hours for sub- consultants, being the act that forms the core of the s 228 charges. On Mr Borlase’s
instruction or direction, Projenz’ administrative staff would make the amendments
56 See, for example, R v Scutts [2015] NZHC 1108; Din v R [2014] NZCA 316.
57 R v Thompson [2005] 3 NZLR 577 (CA) at [12].
58 R v Gunthorp [2003] 2 NZLR 433 (CA) at [134].
directed by Mr Borlase before the invoices were sent to RDC. Mr Borlase invariably signed off each invoice before it was submitted to RDC.
[139] Accordingly, while Mr Borlase might not have actually typed up the final form of the invoice or been responsible for its eventual dispatch to RDC, there is no doubt that he “used” the invoices for the purpose of s 228.
Pecuniary advantage
[140] The Supreme Court in R v Hayes rejected the proposition that obtaining something to which the defendant was otherwise entitled cannot amount to obtaining a pecuniary advantage. 59
[141] Accordingly, whether or not Projenz was entitled to the “inflated” amounts in the RDC invoices is irrelevant to the element of pecuniary advantage. However Mr Borlase’s belief as to that entitlement will be relevant to the mens rea elements of the charge.
Dishonestly and without claim of right
[142] “Dishonestly” is defined in s 217 of the Crimes Act as follows:
dishonestly, in relation to an act or omission, means done or omitted without a belief that there was express or implied consent to, or authority for, the act or omission from a person entitled to give such consent or authority
[143] The wording of the definition means that the Crown must prove beyond reasonable doubt that Mr Borlase did not believe that the amendments he made to the invoices were (expressly or impliedly) consented to, or authorised by, a person entitled to give such consent or authority – i.e. RDC.
[144] Importantly, the test is subjective. The belief must be genuinely held, but does not need to be reasonable.60 Nevertheless the reasonableness of a belief can
provide evidence as to whether the belief was actually held.61
59 R v Hayes [2008] NZSC 3, [2008] 2 NZLR 321.
60 R v Hayes, above n 59, at [58].
61 R v Hayes, above n 59, at [46].
[145] This element also requires the Crown to prove that Mr Borlase used the documents without claim of right.
[146] Any claim of right must relate to a belief in a legal right to use the document in the dishonest way the defendant did.62 This is in contrast to a belief that there is (implied or express) consent or authority to use the document in the manner in which it has been used. In R v Hughes, the Supreme Court said that the belief contained in the definition of “claim of right” need not be a reasonable belief but, like the similar concept in the definition of “dishonestly”, its reasonableness will have an evidential
relevance to the question of whether the belief was actually held.
[147] Accordingly, if the Crown cannot exclude the reasonable possibility of a genuine belief by Mr Borlase in the appropriateness of the amendments he made to the invoices (even if that belief is unreasonable), it will not have proved the “dishonestly” element of the offence beyond reasonable doubt.
F. FACTS Introduction
[148] This section of my Reasons for Verdict sets out a broad factual chronology of events as I have found them reliably proved, over the period from the late 1990s to
2013. It is intended as a broad chronological overview of the relevant events that occurred at RDC and then Auckland Transport, including two significant tender processes during this period (pursuant to which Projenz was awarded contracts). I emphasise at this juncture that I have not addressed or included in this narrative the various benefits (such as lunches, dinners, travel, conferences and the like) that were regularly provided by Projenz to RDC and then Auckland Transport employees (including Mr Noone and Mr George) during this period. Not only are the large majority of those benefits not the subject of the charges before me, but their sheer frequency makes it impracticable to reference all of them in the factual narrative. Rather, at the conclusion of the factual narrative, I have addressed these types of
benefit by topic.
62 Bruce Robertson (ed) Adams on Criminal Law (looseleaf ed, Brookers) at [CA228.05] citing R v
Hayes, above n 59.
[149] Also during the period April 2006 to June 2013, Mr Noone was rendering regular monthly invoices to Projenz for consultancy service the defence say he was providing to Projenz throughout this period. Again, I have not referenced each and every one of these invoices during the factual narrative. It is sufficient to note at this point that they were rendered every month from April 2006 to June 2013, and sometimes more than one invoice per month. This included during the two tender processes referred to above. Again, I deal with Projenz’ regular payments to Mr Noone in response to these invoices as a separate topic, when addressing the charges against Mr Borlase and Mr Noone in relation to those payments.
[150] Finally, at the conclusion of the factual narrative, I address three particular matters which again lend themselves more readily to being dealt with as a separate topic, rather than interspersed throughout the factual chronology. These are:
(a) The setting of budgets and delegated financial authorities at RDC and
Auckland Transport;
(b) The gift policies and registers at both RDC and Auckland Transport;
and
(c) The coding by Projenz of the various benefits provided to RDC and Auckland Transport staff, and Mr Noone’s regular monthly payments, to RDC and then Auckland Transport job codes within the Projenz accounting system.
1990s to April 2006
[151] A common feature of this trial was that a number of the persons who gave evidence have known each other for a long time and often worked alongside or with each other in various organisations.
spreadsheet (and attached a rate of $120 per hour to them).
101 Ms Oosthuizen said that she found out at some point while she was in Australia, after April
2007, that Mr Noone had been employed by RDC.
[791] Ms Oosthuizen was also asked about the overall format of the invoices. She agreed that when it came to drafting a particular invoice for a particular project, it was pretty standard for her to go into the last month’s invoice and copy the format across to be used as a template for the next month’s billing cycle. She also agreed that she did not go back to look at the underlying offer of service or purchase order, and took instructions from the Projenz project manager as to the basis for the invoice. This questioning was presumably aimed at the submission made on behalf of Mr Borlase that simply because the invoices submitted to RDC set out sub- consultants’ hours and rates did not necessarily mean the basis for charging that had been agreed between RDC and Projenz was a straight hourly rate or “time writing” basis (i.e. it could have been a lump sum job). I note at this point, however, that in an “invoicing procedure” document which Ms Oosthuizen had prepared in advance of her handover to Ms Papenfus in early 2007, a distinction had been drawn between an hourly rate job and a lump sum job:
[792] No evidence was given as to what was meant by point 6(b) above and how that reflected on both a draft invoice presented to the relevant project manager for review, and the final invoice that went to RDC. Point 8 of the document also recorded “do the changes if any and move current costs box to right (out of print area). Good to keep for easy cost tracking” (my emphasis). This seems to indicate that prior to the invoice being finalised, some costs information may have been given to the project manager when reviewing the draft invoice, but this information would be removed from the “to print” area once the invoice had come back to Ms Oosthuizen. Ms Oosthuizen was not asked about this specific entry in the invoicing procedure document, and therefore my comments are speculative. It is possible Ms Oosthuizen meant something quite different.
[793] Also in cross-examination, Ms Oosthuizen accepted that it was possible that the purpose of her workings on the right hand side of the invoice workbooks was simply an effort by her to measure costs against the ultimate value of the invoice.
[794] As noted, Ms Papenfus took over the accounting role in April 2007. She gave evidence that when she started at Projenz in March 2007, she had an approximately two-week handover period with Ms Oosthuizen.
[795] She was asked about the invoice workbook procedure that Ms Oosthuizen had used. She was quite upfront that she did not really understand the process or what the various figures were in the invoice workbook. She said she had carried on with that format for a couple of months but very soon prepared her own format of the invoice workbook. She also continued to utilise the all hours spreadsheet. Within a few months of Ms Papenfus taking over the accounting function, Mr Noone’s hours were removed from the all hours spreadsheet.
[796] As noted, Ms Papenfus established a new version of the invoice workbook. Rather than the “being dispersed” text and so on that had been shown on the righthand side of Ms Oosthuizen’s version of it, the format for Ms Papenfus’ workings looked like the following:
[797] Ms Papenfus explained that her process was to create a “box” on the right hand side of the invoice workbook which collated all the expenses which had been coded to the job code for the project that was being invoiced. Each month a new box
would be added, so that by June 2009, the right hand side of each workbook contained boxes for each month, from April 2007 through to June 2009.
[798] By reference to the extract set out above, which is taken from Ms Papenfus’ invoice workbook for July 2009 (for the 450-019 job code), Ms Papenfus confirmed that the second set of numbers from the left hand side (i.e. those totalling $8437.06) were from May 2007.102
[799] Common to each “expenses box” is the narration “Murray’s hours” and then
the month. This continued through to June 2009.
[800] As can also be seen in the above extract, various other expenses have been coded to 450-019, and therefore included in the “expenses box” for a particular month. For example, the “Carlson Wagonlit” reference of $4,232 was the redemption by Mr George of the travel voucher that was presented to him by Mr Borlase for his 60th birthday. The various travel, accommodation and other benefits provided by Projenz to RDC staff over this period were invariably coded to RDC job numbers. As a result, those expenses would also show up in the relevant monthly “expenses box”.
[801] Ms Papenfus gave evidence that prior to presenting the draft invoice to the relevant project manager for checking, she would “drag and drop” the expenses box for that month’s invoice over to the left hand side of the spreadsheet, where the draft invoice itself was printed. This would therefore put the box into the “to print” area of the spreadsheet. This would then be printed and provided to the project manager. Ms Papenfus said that she did this so the project manager had that expense information in front of them when they were reviewing the draft invoice. Invariably
the project manager reviewing the draft invoices for RDC was Mr Borlase.103
102 Not all of the text is visible in a printed version, but can be seen in the electronic excel version.
Mr Hudson produced in evidence a document that he had created and which records all the
entries in these “cost boxes” through to June 2009 in a more legible format.
103 The sub-consultants gave evidence that they were generally not involved in preparing the invoices to go to RDC, other than perhaps reviewing a draft and updating the “description” of work done that month. The sub-consultants also confirmed that they were not involved in negotiating and agreeing the fee for a particular job, which was generally Mr Borlase’s domain.
[802] Like Ms Oosthuizen, Ms Papenfus said that the draft invoices would often come back from Mr Borlase with the hours and bottom line amount to be billed increased from the draft she had prepared (and based on the all hours spreadsheet). Again, and like Ms Oosthuizen, she would make the changes in the electronic version of the invoice and finalise it ready for dispatch to the end client. She said she did not query why the hours and amounts may have been increased from the draft invoice she prepared.
[803] In cross-examination, Ms Papenfus explained that on some occasions when the sub-consultants’ invoices did not include a job code for their hours (or part of them), she had an area in her all hours spreadsheet called “Other”. If, despite discussion with the sub-consultant, the appropriate job code could not be discerned, she would hold that time in the “Other” category for discussion with the project manager when preparing the invoices. She also confirmed that during the few months when she continued to use Ms Oosthuizen’s format of the invoice workbook (which had the “being dispersed” workings in it), those workings were not provided to the project manager when she provided the draft invoice to them for review. She also accepted that the purpose of recording expenses in the monthly expenses boxes was so that the project manager could see those expenses alongside the sales to be generated for that month, but that did not mean that everything in the individual expenses box was going to be included in the invoice to the client.
Mr Borlase’s evidence
[804] As noted, Mr Borlase did not dispute the changes he had made to the invoices.
[805] Mr Borlase produced a number of exhibits, mainly service orders for various projects, in support of his position that he believed at the time that he was entitled to charge the “inflated” amount to RDC. Those service orders related to some of the job codes that feature in the invoices that are the subject of the s 228 charges. The point Mr Borlase made was that there were a number of different bases upon which Projenz and RDC might agree Projenz would be entitled to charge RDC. As such, it cannot be assumed from the face of an invoice that simply because hours and rates
for sub-consultants are shown, the basis for charging agreed with RDC was a straight hourly rate basis. His point was that even if hours and rates were shown, the underlying agreement might have been a lump sum price.
[806] A large part of Mr Borlase’s evidence was going through these service orders, and explaining in relation to each of them what he understood was the basis for charging that had been agreed.
[807] Thirty-nine of the 127 invoices that make up the s 228 charges relate to the
450-019 job code.
[808] The essence of Mr Borlase’s evidence in relation to invoices with this job code was that the agreement between RDC and Projenz was that Projenz was entitled to charge a lump sum of $19,500 per month. The basis for this proposition was a series of documents from 2003 and early 2004.
[809] The first of these was a letter dated 4 July 2003 from Projenz to RDC, containing an offer to carry out a rewrite of the physical works contracts (exhibit B13). The document provided the following in relation to “payment”:
We propose to carry out this commission on an hourly rate basis. As the timing for the completion is uncertain we propose that the engagement is on a month-by-month basis until completion with a target estimate of $19,500 plus GST/month.
(Emphasis added)
[810] This proposal was evidently acceptable to RDC, as a purchase order dated
30 July 2003 and in the amount of $19,500.00 was produced. These documents were put to Mr Malcolm Black, a long-serving RDC employee, in cross-examination. He accepted the proposition that “the Council was authorising a budget to Projenz of
$19,500 per month for that work”. However, in response to an earlier question on the same topic, Mr Black had said the following:
Q. So the expectation was that Projenz could have a budget of
$19,500 plus GST per month for that project or work stream, correct?
A. Yes, depending on the hours spent on that project. (Emphasis added)
[811] Mr Mansfield then put the proposition to Mr Black that the approved budget of $19,500 was the approved monthly budget for work carried out on the 450-019 project from July 2003 going forward, such that Projenz would be entitled to charge a lump sum of $19,500 per month for any work done on the 450-019 job code. Mr Black’s answers to the proposition were, quite understandably, not clear, given the passage of time and the absence of later documents. When later invoices referable to the 450-019 project code were put to him, and the suggestion that Projenz had again been approved a budget of $19,500 plus GST for that month, he replied variously “I don’t know”, or “I don’t quite understand the question”. In response to the proposition that the RDC approved budget for this work on a month-by-month basis was up to $19,500 plus GST, Mr Black responded “Yes, but I’m not too sure where that approval came from”. It was also put to him that there was a “general understanding between Projenz and the Council that the same arrangement was rolling over while they continued doing that work”, to which he responded “I don’t know what the arrangements were”.
[812] A “target estimate” of $19,500 certainly appears to have been agreed for the first task in the 450-019 work stream, namely the rewrite of the physical works contracts. Having heard Mr Black’s evidence on this topic, I do not take it as confirmation that, on the 450-019 job code, Projenz was able to charge a lump sum of $19,500 per month for all work streams.
[813] The contract rewrite work appeared to progress over the period July 2003 to
24 September 2003. I take the latter date from a further exhibit produced by Mr Borlase (exhibit B16), being a letter of that date from Projenz to RDC which stated:
Now that the road network maintenance SIA [Statement of Interest and Ability] has been released and draft contract documentation for Hibiscus Coast has been made available for comment we consider it an appropriate time to discuss a number of issues where Projenz can offer RDC additional value in the area of road maintenance and management thereof.
[814] The letter went on to set out various tasks where Projenz could assist in the management of these contracts. This included providing an implementation co-ordinator to assist the implementation of the contracts once the tender process had been completed and the contracts awarded; and the provision of constant review of contract objectives and goals throughout the lifespan of the contracts.
[815] The recipient of this letter, Ms Booth, responded to the letter some months later on 10 February 2004, noting that she had discussed Projenz’ proposals internally. The upshot of Ms Booth’s communication was that RDC would revert to Projenz once the new contracts had been let so that any ongoing work from Projenz could be more definitively defined and considered. Ms Booth commented in her letter that “it is anticipated that the Projenz team nominated within your offer of service could provide additional management or facilitation where a shortfall in expertise or time exists”. She therefore proposed that the matter be discussed in April 2004.
[816] There were no further documents produced in this chain of correspondence. None of the witnesses who were involved in the discussions at the time (including Mr George and Mr Borlase) could recall the outcome of any further discussions which did take place.
[817] I do not consider this further correspondence supports the proposition being advanced for Mr Borlase. In fact, it potentially suggests the opposite. It indicates that the contract rewrite, for which a monthly “target estimate” had been agreed, had come to completion and the discussion and approval of any further work would take place as a separate matter. This is also coincides with common sense, where the ongoing work streams may be quite different to the contract rewrite, such that the pricing may vary.
[818] This leaves one final matter, being Mr Borlase’s suggestion that the reference in this documentation (and in other documentation produced in relation to other job codes) to a “target estimate” per month was a reference to a lump sum or fixed fee for that month. Mr Borlase stated that “I would be invoicing a target estimate up to
$19,500 per month”. When asked why he would not just invoice a lump sum of
$19,500 per month (which on his case, he was entitled to), Mr Borlase replied:
Because we were trying to do was work with Council and show them that we were competitive. We were offering value and that if we could come in under that 19 and a half not only would it save Council money but I mean there would be some benefit for us no doubt if we didn’t have all those cost, but it would also show a benefit to Council working with us because we’re coming in under that budget ceiling.
[819] The Crown produced a summary of the 450-019 invoices from Projenz prior to the start of the first charge period (April 2006). This showed that there was a wide spread in the amount invoiced in relation to that project code in the two-and-half years prior to April 2006. I accept the Crown’s submission that there was nothing like a pattern of lump sum charging in this invoicing. Certainly, from September
2004 onwards, the monthly invoices were generally significantly less than $19,500 per month, often in the range of $7,000 to $9,000.
[820] My reading of the documents produced is that the reference to a “target estimate” is much more likely to be a cap on what could be billed each month, but what was to be billed (up to that amount) depended on the hours worked that month (i.e. as per Mr Black’s evidence). For example, this is consistent with the terms of Exhibit B13, where the proposal was to carry out the commission on “an hourly rate basis”, but with a “target estimate” of $19,500 per month. If the $19,500 per month was a lump sum or fixed fee, there would be no logical basis to propose to carry out the commission on an “hourly rate basis”. This is also consistent with Projenz’ proposal for ongoing work on the 450-019 matter and discussed above. Projenz proposed that future work was to be carried out on the following basis:
On this basis we recommend that Projenz is engaged on an hourly rate basis or if preferable a monthly basis with a target estimate budget to be confirmed but charged on an hourly rate plus disbursements basis
… Alternatively we consider the above-mentioned work could be packaged into discrete and isolated work groups, as the contract
process unfolds, where Projenz can offer economic lump sum fee proposals based on the hourly rates mentioned above.
[821] This proposal set out three alternative charging bases, although the wording is not entirely clear. However, my reading is that the first is a straight hourly rate basis, the second is the cap arrangement I have referred to above (but as the words
themselves state, still charged on an hourly rate plus disbursements basis), and the third being a lump sum fee proposal. If the second option was a straight “fixed fee” or lump sum per month, it seems odd to nevertheless say that it would be “charged on an hourly rate plus disbursements basis”.
[822] This is consistent with other documentation produced by Mr Borlase in relation to other job codes to which the disputed invoices relate. By way of example only:
(a) An offer of service in July 2003 in relation to the Projenz job code
0456, proposed the following:
We offer the following experienced personnel, rates and estimated budget figures for your approval. The engagement of services would be on an hourly rate basis with an expectation that the monthly budget figure is a target estimate not to be fully expended, on a monthly basis, unless advised otherwise during the month. For clarity the monthly budget is not a lump sum fee but only an indicative amount based on worst case scenario for the scope of works indicated above.
(Emphasis added)
(b)An offer of service of July 2004 on the 0456 project, which proposed a “Target estimated (“capped”) for initial report: $8,500 (excl GST)”. This was accepted by RDC, the acceptance letter stating “your offer is accepted, on the basis of a capped estimate of $8,500 excluding GST”.
(c) Various “terms of reference” were also produced in relation to particular projects. These terms of reference were generally developed in connection with seeking funding from NZTA for development work. These set out the outputs for each project, and had a “cost estimate” attached to each item. Again, if this was a fixed fee or lump sum, it would seem more logical to use those words rather than “cost estimate”. I also do not consider these documents set the pricing agreement as between Projenz and RDC; rather they were
documents to be submitted by RDC to NZTA in connection with a funding application for the relevant project.
(d)Reference in a letter of February 2005 (in relation to East Coast Road Extension procurement recommendations, also project 0456), to “Council has allowances for stage one of the East Coast Road Extension in the LTCCP for I&R and design and documentation phases ($400,000) plus $1 million for construction (2005/2006)”. Mr Borlase said that the $400,000 was the lump sum fee being proposed by Projenz. However, the document seems to be suggesting that that is the budget that Council has available in the LTCCP.
(e) Three exhibits were produced (Exhibits B27, 28 and 29) which included fee proposals based on a mix of hours plus rates and lump sum proposals. The letters stated “items listed as hourly rates are target estimates of hours only. Should additional time be required on these items it will be undertaken at hourly rates upon Council approval to proceed”. Again, there was a clear distinction in these documents between the concept of a “target estimate” and a lump sum.
(f) Mr Borlase also produced Exhibit B33, which is a brief dated
23 February 2009, in the new “Infrastructure One” template.104 The brief referred to “a fee estimate”. The narrative stated “the above target estimate indicates we will not exceed the limits without your prior approval”. Again, that appears more consistent with a cap, rather than a fixed fee or lump sum. I make the same observation in relation to other briefs in the Infrastructure One format produced by Mr Borlase (Exhibits B34 and B35).
[823] It is to be acknowledged, however, that some of the terminology in these documents is not clear, and there were other exhibits produced which arguably used
104 Although the Infrastructure One contracts had not rolled out at that point, it appears the new forms were being phased in.
the term “target fee estimate” as an amount that could be charged in full that month (with anything over that amount being subject to hourly rates). An example of this is Exhibit B7, which referenced a target fee estimate of $5,900, which then set out hourly rates for any additional services (i.e. outside of the scope of work which was to be covered by the target fee estimate). Given the hourly rates were only referenced in relation to additional services, it cannot be excluded that the “target fee estimate” was understood to be an amount that could be charged irrespective of the hours worked. Another variation of the price to be charged and referenced in some of the documents was “cost”, with no reference to hourly rates or lump sums. A further variation was “price”, as shown in Exhibit B25. While this does not refer to the “price” being lump sum, it is arguable that that is what was intended.
[824] I have considered all of the documents produced by Mr Borlase in relation to this issue, as well as Mr Borlase’s evidence in relation to them. Standing back, I found many aspects of Mr Borlase’s evidence in this regard unconvincing. This is because his explanations often strained the ordinary and natural meaning of the words used in the documentation that can now be located. This is particularly so in relation to Mr Borlase’s contention that where an offer of service referred to a “target estimate” for the month, he understood this to be a fixed lump sum.
[825] I nevertheless accept the submission made on Mr Borlase’s behalf that some of the documentation is unclear and that there appears to have been a variety of concepts and words used to describe the charging basis agreed with RDC.
[826] For the reasons given above, while I do not dismiss Mr Borlase’s evidence on this topic entirely, I place relatively little weight on it. I must therefore consider whether, even putting aside Mr Borlase’s evidence, the remaining evidence satisfies me that the Crown has proved the charges beyond reasonable doubt.
[827] Ultimately, the evidence offered by the Crown comes back to the simple proposition that, given the relevant invoices showed sub-consultants’ hours and rates, the price agreement with RDC in respect of each invoice must have been an hourly rate basis. As a consequence of that, the Crown says that when adjusting the hours from those shown in the underlying sub-consultant invoice, the only logical
inference is that Mr Borlase did not, at that time, have a genuine belief that RDC
consented to or authorised the amount being invoiced.
[828] While I consider it likely that invoices prepared in the format of hours and rates were to be charged on an hourly rate basis, I am not sure of that fact. I consider it possible that the basis upon which a sub-consultant charged Projenz was not necessarily relevant, at least directly, to what Mr Borlase believed he was entitled to charge RDC. While it is inappropriate to state on the face of an invoice the fact that a consultant has worked a certain number of hours, when the underlying invoice shows they have worked something less, that does not exclude the possibility that Mr Borlase nevertheless believed that, in terms of the overall amount he was entitled to charge RDC, the amount he charged in the invoice was consistent with that. Further, there was no evidence that the relevant RDC employee ever challenged any of the invoices presented, which arguably supports the fact that the total amount charged was consistent with RDC’s understanding at that time of what Projenz was entitled to charge.
[829] Compounding my doubt in relation to these charges is that the Crown’s theory is that the over-charging was designed to recoup the expenses Projenz was incurring in a particular month, including Mr Noone’s consultancy invoices and other benefits provided to RDC staff. In the Crown’s opening, it was stated that:
Not only were the invoices inflated, they were inflated to recoup Noone’s monthly invoices to Projenz and other entertainment and travel Projenz was providing to RDC employees including George. Projenz accounting records link the monthly payments to Noone to these inflated invoices, with the effect that the inflations largely cover the payments to Noone, benefits to George, and the general entertainment and travel for RD staff during this charge period.
[830] However, as the evidence was explored during the hearing, it was evident that in many instances, the amount of the “inflation” bore no resemblance to the relevant expenditure incurred by Projenz that month, and in many cases, was significantly less. I have already referred to the fact that many of the adjustments were for a very small numbers of hours. This was particularly so in the invoices rendered by Projenz in the latter half of the period to which these charges relate. In addition, three of the
entries in the Crown’s schedule of alleged inflated invoices record a negative figure,
namely there has been an “undercharge” rather than an overcharge.105
[831] Finally, and as noted, there were no invoices to RDC or related sub- consultants’ invoices produced for the period prior to 30 April 2006 (though the evidence was that at least the invoices for March 2006 had not been inflated). This would have been helpful to assess whether there was a change in approach by Mr Borlase to accommodate the ongoing substantial payments being made to Mr Noone, and which made up a significant portion of the amounts said to be recouped through the inflated invoices.
[832] Standing back and considering all of the evidence I heard in relation to these charges, I am not satisfied beyond reasonable doubt that the facts I find reliably proved lead to the inference that Mr Borlase did not believe at the time that his adjustments to the invoices were appropriate. That is not to say that I consider that any such belief would have been reasonable, but as explained in the legal principles section above, the reasonableness of the belief is not an element of these charges. I should add, however, that Mr Borlase’s evidence in relation to these matters was, in the main, unconvincing. Had the burden of proof been the civil burden, the outcome might have been different. However, I have reminded myself that I must be sure of Mr Borlase’s guilt on these charges, and I am not.
K. CONCLUSION
[833] These are my reasons for the verdicts I have delivered today.
Fitzgerald J
105 In an invoice dated 31 March 2007 on project 450-017, one sub-consultant’s hours for that project are shown in his invoice as 38 hours, whereas only eight are billed in the invoice to RDC. Similarly, in an invoice dated 30 June 2006 in relation to the 450-456 project, the sub- consultant’s hours for that project are shown in his underlying invoice as 76 hours, and then billed in the RDC invoice at 60 hours. Finally, in an invoice dated 31 July 2008, in relation to the 450-019 project, the sub-consultant’s hours for that month are shown as 53 in his underlying invoice, but only 48 are billed in the invoice to RDC.
2
8
0