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R v Bublitz

R v Bublitz

Case [2019] NZHC 222 21 February 2019

Breach of Contract

Unconscionable Conduct

Corporate Law & Governance

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2014-004-2293

[2019] NZHC 222

BETWEEN THE QUEEN

AND

PAUL BUBLITZ, BRUCE McKAY and RICHARD BLACKWOOD

Hearing: 13-17, 20-23, 27-28 August, 3-5 September 2018

Appearances:

DG Johnstone, SS McMullan and S Closey for the Crown

SJ Lance, SNB Wimsett and F Iggulden for Defendant, P Bublitz GNE Bradford and S Withers for Defendant, B McKay
S Kilian and R McCausland for Defendant, R Blackwood

Verdicts:

5 February 2019

Reasons:

21 February 2019

VERDICTS AND REASONS OF TOOGOOD J

[Judge-alone trial under Part 4, Subpart 1 of the Criminal Procedure Act 2011]

This judgment was delivered by me on 21 February 2019 at 3.00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

R v BUBLITZ [2019] NZHC 222 [21 February 2019]

Table of Contents

VERDICTS AND CONSEQUENTIAL ORDERS - Delivered orally at 10am on
5 February 2019......................................................................................................... [1]
Addendum............................................................................................................... [10]
REASONS FOR VERDICTS: Delivered in writing on 21 February 2019............ [11]
Introduction............................................................................................................. [11]
The Crown's case..................................................................................................... [12]
The consequences of the alleged offending............................................................ [40]
Viaduct losses...................................................................................................... [41]
Mutual losses....................................................................................................... [43]
The respective roles of the defendants.................................................................... [45]
The regulatory framework....................................................................................... [50]
The Priority/Viaduct trust deed........................................................................... [53]
The New Zealand Accounting Standards............................................................ [56]
NZ IAS 24........................................................................................................... [57]
NZ IAS 27........................................................................................................... [60]
The Mutual Crown guarantees................................................................................. [63]
The conduct of the trial............................................................................................ [68]
The first trial............................................................................................................ [71]
This trial – evidential issues..................................................................................... [73]
Mr Nicholaas Wevers.......................................................................................... [78]
The approach to setting out the reasons for the verdicts......................................... [79]
Reasons must be concise...................................................................................... [79]
Relevant rules of law and practice........................................................................... [83]
Burden and standard of proof.............................................................................. [84]
Defendants giving or calling evidence................................................................ [86]
A circumstantial case and the drawing of inferences........................................... [88]
Expert evidence................................................................................................... [93]
Separate trials and verdicts.................................................................................. [96]
The corporate structure............................................................................................ [98]
The projects........................................................................................................... [100]
Homebush/Cashmere/Khandallah...................................................................... [101]
Dockland Holdings Limited.............................................................................. [102]
Northgate/Silverdale Project.............................................................................. [103]
The Hilltop/Kawakawa project.......................................................................... [104]

NKE/Awaroa/Helensville project...................................................................... [107]
The charges............................................................................................................ [109]
Theft by a person in a special relationship......................................................... [109]
False statement by a promoter........................................................................... [116]
False statement to a trustee................................................................................ [122]
The question trails.................................................................................................. [125]
Charges 1, 6 and 7 against Mr Bublitz – Theft by a person in a special relationship
........................................................................................................................... [127]
Charges 2, 3, 5, 8, 10, 11, 12, and 13 against Mr Bublitz; Charges 10, 11 and 12 against Mr McKay; Charges 10, 11, 12, and 13 against Mr Blackwood – Theft by
a person in a special relationship....................................................................... [130]
Charge 4 against Mr McKay; Charge 8 against Mr McKay and Mr Blackwood; Charges 14 and 15 against Mr Bublitz – Making a false statement as a promoter
........................................................................................................................... [134]
Charge 9 against Mr McKay and Mr Blackwood – Making a false statement to a
trustee................................................................................................................ [136]
Control of Viaduct by Mr Bublitz.......................................................................... [138]
The nature of the Crown's case.............................................................................. [140]
"Control" in terms of NZ IAS 24........................................................................... [147]
The expert witnesses.......................................................................................... [148]
Discussion to the relevant accounting standards............................................... [152]
NZ IAS 24......................................................................................................... [155]
The power to govern.......................................................................................... [169]
Summary of evidence from which Crown…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v Bublitz

Details

AGLC: R v Bublitz [2019] NZHC 222
Case: [2019] NZHC 222
Decision Date: 21 February 2019

CaseChat Overview and Summary

The case of R v Bublitz involved a criminal prosecution of Paul Neville Bublitz, Bruce Alexander McKay, and Richard Timothy Blackwood for various charges including theft by a person in a special relationship and making false statements as a promoter. The defendants were associated with the Hunter Capital Group, which acquired two finance companies, Viaduct Capital Limited and Mutual Finance Limited, during a period of financial crisis. The prosecution alleged that the defendants engaged in a scheme to use the acquired finance companies to provide funds to the Hunter Group entities, in breach of restrictions on related party transactions and the Crown guarantee. The case turned on whether Bublitz controlled the finance companies and whether the other defendants knew of and assisted in the alleged offending. The High Court of New Zealand, Auckland Registry, after a detailed analysis of the evidence, found Bublitz, McKay, and Blackwood guilty on multiple charges, including charges related to breaches of the Crown guarantee and false statements in a prospectus. The court found that Bublitz had real or effective control over the finance companies and that the other defendants were complicit in the scheme to breach the related party restrictions and the Crown guarantee. The court also found Bublitz guilty of making false statements in a prospectus issued by Mutual Finance Limited. The defendants were remanded on bail pending sentencing.

Orders