R v Cattermole CA 94/05

[2005] NZCA 365

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 94/05

THE QUEEN

v

THOMAS VICTOR HENRY CATTERMOLE

Hearing:         19 July 2005

Court:            Glazebrook, Randerson and Goddard JJ Counsel:       M J Callaghan for Appellant

D G Johnstone for Crown

Judgment:      15 September 2005

JUDGMENT OF THE COURT

The appeal in relation to conviction and sentence is dismissed.

REASONS

(Given by Randerson J)

Introduction

[1]      The appellant was convicted after trial before Judge Saunders in the District

Court in Christchurch on 11 February 2005 on two charges under s 228(b) of the

R V CATTERMOLE CA CA 94/05  15 September 2005

Crimes Act 1961.  He was later sentenced to a fine of $1,250 on each of the two charges.  The appellant now appeals against both conviction and sentence.

[2]      The Crown case against the appellant was that he had dishonestly used a document with the intention of obtaining a pecuniary advantage.  Specifically, it was alleged the appellant had agreed to transfer a motor vehicle to the complainant as security for a debt.   Having transferred registration of the vehicle but without repaying the debt, the appellant then transferred the vehicle back into his own name without the complainant’s knowledge or consent.

[3]      The central issue raised by the appellant both before the Judge and on appeal was whether any pecuniary advantage was obtained given the appellant’s submission that the transfer of registration of the vehicle did not effect a transfer of legal or beneficial ownership.  It was submitted on the appellant’s behalf that he was simply recovering a vehicle which he had owned throughout.

[4]      The Judge ruled against the appellant on this point when an application for a discharge was made during trial under s 347 of the Crimes Act, holding that a pecuniary advantage could be found in the evasion or deferral of a debt.  The Judge directed the jury in similar terms in his summing up.

Background

[5]      The appellant was contracted by a company called Endeavour Portfolio Corporation to manage its business in New Zealand.  The complainant, a Mr Luke Chignell, is a software engineer who was contracted by Endeavour to assist with the development of a software program.  Although he was paid for some of his work, by September 2003 he was owed approximately $12,000.   On 17 September 2003, Mr Chignell sent an email to the appellant expressing disappointment regarding the lack of payment for services rendered.   Mr Chignell proposed a solution in the following terms:

I have a solution that may be acceptable to you in the short-term as I do realise that you also have been party to other peoples lack of integrity.  Your Mercedes is worth a considerable amount and I believe would be a suitable

security. What I propose is that we have the car valued and you transfer ownership to me.  I would then hold the car until the end of November at which time I would have to consider selling it.  Any money above what is owed to me would then be returned to you.   In the short-term you could always use my Corolla even though it is not worth much.  If, between now and November you receive funds you can pay me and I would transfer the car back to you.

I hope we can come to a suitable agreement and continue what could be a successful business relationship.

[6]      Thereafter there were various promises by the appellant to clear the debt but matters had not improved by the time of a further exchange of emails between

13 and 15 October 2003.  In response to advice from the appellant that he would sign the car over to Mr Chignell, the latter responded with an email on 14 October 2003 which included the following two paragraphs:

No idea what your car is worth.  First question is, does that leave you high and dry without transport???   If so, the ownership is the only real issue.  We can do an ownership transfer, but you keep it or we can store it in our garage here.  Either way makes no difference.  You would need to continue with the insurance payments though.   I am not sure how to change ownership of a car.  I think you take the forms to NZ Post and then post them to me???

If we get a valuation for the car and then we do the drip feed payment from Endeavor Commissions and any other funds that come through.   In other words, the car is merely a security, but gives you a decent breathing space. If we said the car was worth say $25K and there is $5K in funds available, then that is $30K total.   That leaves at least $13K for me to finish the monthly processing and any outstanding bugs.

[7]      The appellant responded to this email on 15 October 2003 advising that he was “happy to do a transfer on the car, I will go into NZ Post tomorrow and sort that”.  He added that this would leave him “high and dry a little with transport as to a lot of places I have been driving …”.  He also advised that he would need to check the value of the car, referring to the fact that he had paid $46,000 for it the year before and that “there is no debt on it what so ever”.

[8]      Then  followed  three  emails  between  Mr  Chignell  and  the  appellant  on

20 October 2003:

Hi Luke

I guess we should put something in writing around the car situation.   Not sure who’s or what name you plan to transfer it in to.  Do you want to draft

an agreement?  Basically the ideal would be that it remains in your name as security over the amount owed by EP to you, that once EP is current the vehicle transfers back.  That in the mean time the security over the vehicle is limited to the amount owed by EP.  Just think if anything happened to you we need to make sure all parties are clear.

Victor Cattermole Victor

I agree.  I am happy with the email below to show intent/contract.  The only issue is there is no timing mentioned.

I would expect the rest of the money to be sorted by end of this year.   In which case I would transfer the ownership back to you.  In the case where funds are not paid by the end of the year and we have not agreed to an alternative the car would be sold to pay the outstanding invoices and any remaining funds from the sale of the car would be returned to you.

Cheers

Luke

Hi

I think what we need to do is assess the situation at the end of November and then again at the end of December.  Obviously if we are in a situation say at the end of December where we have say two invoices still outstanding we may agree to extend for another month?  If we have still made little or no progress then we would obviously be looking to realise the asset.

Victor Cattermole afterwards, on 24 October 2003, registration of the Mercedes motor car owned by the appellant was transferred into the name of Mr Chignell who continued to provide services as he had before.  However, by 1 December 2003, the outstanding debt had risen to $19,600 and Mr Chignell was once more pressing for payment.  Then, on 1 January 2004 Mr Chignell sent a further email to the appellant referring to the previous emails and stating:

If you read the emails below you will clearly see what we agreed was I would be paid by the end of this year.  If that did not happen then we would be selling the car.  My concern is the expectation that I wait another month to then be told another story as to why the car is not sold.

…

The purpose of the car is security.  As we had agreed we are now in 2004 and I will now realise that security.  …  I will still do my best to get a good price for the car, but I will not be mucked around anymore.

[10]     On 29 January 2004, without the knowledge or consent of Mr Chignell, the appellant completed a notice of change of ownership form (known as form 13B) informing the Registrar of Motor Vehicles that the vehicle had been transferred back into  his  own  name.    The  appellant  signed  this  form  opposite  the  words  “New Owner’s Signature”.  Shortly afterwards, on 4 February 2004, the appellant also gave notice to the Registrar of Motor Vehicles (on a form known as 13A) giving the name of Mr Chignell as the seller/disposer of the vehicle and his own name as the new owner.  The appellant also signed this form above the words “Disposer’s Signature”.

[11]     When Mr Chignell discovered that the motor car had been transferred back to the appellant he complained to the police.   Thereafter, the appellant was charged that, with intent to obtain a pecuniary advantage, he dishonestly and without claim of right used a document namely the MR13B and MR13A change of ownership forms on the respective dates of 29 January and 4 February 2004.

The application for a discharge under s 347 of the Crimes Act

[12]     During the trial, the appellant sought a discharge on the ground that the transfer of the registered ownership of the motorcar back into the appellant’s name did not secure to him any pecuniary advantage within the meaning of s 228 because the appellant had at all times retained ownership of the vehicle and had done no more than to agree to the vehicle being used as security for a debt.  It was submitted before the Judge that the registration of a change of ownership did not effect any transfer of legal ownership of the vehicle.

[13]     After hearing argument, Judge Saunders held:

The view that I have taken of the matter is that what is important in relation to the words “with intent to obtain pecuniary advantage” is the mental element, rather than the legal consequence.   In a recent House of Lords decision R v Smith [2002] 1 All ER 366, a case I note which is also referred to Adams commentary and post-dates the New Zealand authority cited to me, their Lordships found that “evading or deferring a debt, falls within the

scope of the ordinary and actual meaning of deriving a pecuniary advantage”

see the judgment of Lord Rodger of Earlsferry at page 372 paragraph 20.

Accordingly  I do not accept that the argument that because legal ownership did not change, the dealing with the ownership forms in January and February, would not result in a pecuniary advantage.   If what the accused intended by use of the document, and I accept this as a matter of fact for the jury, was to evade a debt which he knew was due to the complainant by

31 December 2003, then this would satisfy the elements of using a document with intent to obtain pecuniary advantage.  The real issue, I believe, if for the

Crown to prove that in so using the document he was not acting honestly or

that any claim of right relating to the use of the documents has been negatived.

[14]     The Judge ruled in summary:

A Mercedes car used for security may well have legally remained with the accused as owner, however depending on what view the jury take of the accused intent on or about the 29th  of January, it is open for the Crown to invite the conclusion by a jury that the use of the documents did have an intent to evade or defer the payment of a debt.

The summing up

[15]     The Judge directed the jury in similar terms when summing up:

The second element is that the use of the document, whether it be 13a or b, must have been done with an attempt to obtain a pecuniary advantage.  Now with  “pecuniary advantage”, pecuniary simply means monetary, and I direct you that a pecuniary advantage is to be interpreted as covering a situation where somebody intends to evade or defer payment of a debt.  This element requires you as a jury to consider the accused’s intent at a specific date and those dates are set out in the indictment – the 29th  of January 2004 and the

4th of February of that year.  As I have said to you intent is generally proved by the Crown asking you to draw common sense inferences from proved

facts.  You have to ask yourselves, having considered the evidence, do I find

that Mr Cattermole intended, by the use of the document on those dates, to obtain a monetary advantage such as evading a debt that may have been due

by him to the complainant.   Was he preparing and filing this document

trying to defeat or evade steps that might be taken by Mr Chignall to realise his  security  or,  alternatively  as  argued  by  the  defence,  was  he  merely asserting  his  rights  of  ownership  of  the  vehicle  and  transferring  the registered ownership back into his sole name.  So that is the second element and one which you would likely to have to first concentrate on.  What was his intent at the time that those documents were filed?  Was it to take steps to defeat or evade the payment of the debt or was he merely asserting his rights to change the ownership of the vehicle back into his own sole name?

The appellant’s submissions

[16]     In  succinct  submissions,  Mr  Callaghan  for  the  appellant  repeated  his submission made in the District Court that no pecuniary advantage was obtained by the appellant in transferring the registered ownership of the vehicle back into his own name because he was doing no more than asserting the legal ownership which had remained with him at all times.   Mr Callaghan relied on the decision of this Court in Ruka v Director of Social Welfare [1997] 1 NZLR 154 for the proposition that no pecuniary advantage is obtained if a document is used for the purpose of obtaining something to which an accused is entitled. It was also submitted that the decision of the House of Lords in R v Smith [2002] 1 All ER 366 (relied upon by the Judge) was distinguishable on a variety of grounds. Finally, Mr Callaghan submitted the appellant could not have obtained a pecuniary advantage because the debt was not owed by the appellant but by the company Endeavour Folio Corporation.

Crown submissions

[17]     The principal submission made by Mr Johnstone on behalf of the Crown was that, in transferring the vehicle back into his own name, the appellant received unimpaired ownership of the vehicle to which he was not entitled in terms of the agreement he had entered into with Mr Chignell.   By changing the registration details back into his own name, it was submitted the appellant obtained an ability to deal freely with the motor vehicle including the ability to dispose of it.  By doing so, the Crown submitted that he effectively removed any ability from Mr Chignell to enforce the debt owed to him.

[18]     Mr Johnstone also submitted that, in any event, it was not necessary to prove the appellant actually obtained any pecuniary advantage.  It was submitted that the focus of s 228(b) is on the intention to obtain a pecuniary advantage whether or not that occurs in fact.  Finally, Mr Johnstone submitted that it did not matter whether the appellant’s intention was to obtain a pecuniary advantage for himself or for the company.   In that respect, Mr Johnstone pointed to s 217 of the Crimes Act 1961 which  provides:  “Obtain”  in  relation  to  any person,  means  obtain  or  retain  for

himself or herself or for any other person”.  The expression “person” includes any company:   s 2.   As Mr Johnstone submitted, s 217 applies to all sections under Part 10 of the Crimes Act including s 228.

Discussion

[19]     The starting point is s 228 which provides:

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.

[20]     The essential elements the Crown was required to prove against the appellant were:

(a)      The dishonest use of a document;

(b)      With the intention of obtaining a pecuniary advantage; (c)     The absence of any claim of right.

[21]     The appellant did not dispute that he had used a document.  The essence of the defence was that he did not have any intention to obtain a pecuniary advantage because he was simply recovering property which he had owned throughout.

[22]     The registration of motor vehicles is controlled by the Transport (Vehicle and Driver Registration and Licensing) Act 1986.  It is common ground that registration as the owner of a vehicle under the 1986 Act does not confer legal or beneficial ownership on the person so registered.  That follows from the definition of “owner” under the 1986 Act:

Owner, in relation to a motor vehicle, means the person lawfully entitled to possession of the motor vehicle, except where—

(a)      The motor vehicle is subject to a bailment that is for a period not exceeding 28 days; or

(b)      The motor vehicle is let on hire pursuant to the terms of a rental- service licence—

in which case owner means the person who, but for the bailment or letting on

hire, would be lawfully entitled to possession of the motor vehicle:

[23]     Section  20  of  the  1986  Act  places  an  obligation  on  a  person  selling  or otherwise disposing of a motor vehicle to give notice to the Registrar of Motor Vehicles of the sale or other disposition of the vehicle within 7 days.   Section

22 imposes an obligation upon the person acquiring ownership of a motor vehicle to give notice to the Registrar as well.   Upon receipt of both notices, the Registrar effects the transfer of registered ownership on the register.

[24]   In considering whether beneficial ownership of the motor vehicle was transferred, it is necessary to examine any underlying agreement for sale or other disposition. Although Judge Saunders was inclined to the view that the legal ownership of the vehicle may well have remained with the appellant, we take a different view of the effect of the exchange of emails between Mr Chignell and the appellant.

[25]     We consider it is quite clear (based on the email from Mr Chignell to the appellant of 17 September 2003 and the terms of the three emails exchanged on

20 October  2003)  that  the  parties  intended  to  transfer  both  legal  and  beneficial ownership of the vehicle to Mr Chignell by way of security for the debt owed by Endeavour to him.  In consideration of the transfer, Mr Chignell agreed to continue providing services to the company and he did in fact do so until around Christmas

2003.    The  parties  agreed  that,  in  the  event  of  the  debt  not  being  repaid  by Christmas 2003, Mr Chignell would be at liberty to sell the motor vehicle in order to repay the debt and that he was to account to the appellant for any balance remaining. Possession of the motor vehicle was to remain in the hands of the appellant pending any such sale.

[26]     On  that  basis,  the  purported  use  of  the  registration  documents  by  the appellant to transfer the registered ownership of the vehicle to himself without the knowledge or consent of Mr Chignell was plainly intended to secure a pecuniary advantage to the appellant.  We accept that, by doing so, the appellant intended to regain both legal and beneficial ownership of the vehicle for himself which is self-

evidently a significant pecuniary advantage.   In doing so, he acted inconsistently with the agreement to sell the vehicle if the debt had not been paid by the end of December 2003.   He dishonestly transferred the vehicle back into his own name without the knowledge or consent of the complainant at a time when he knew the complainant was pressing for the debt to be repaid or the vehicle sold.

[27]     But even if legal and beneficial ownership of the vehicle remained at all material  times  with  the  appellant,  we  accept  the  Crown’s  submission  that  the appellant nevertheless obtained a pecuniary advantage within the meaning of s 228. By changing the registered ownership into his own name, the appellant obtained the ability to deal freely with the vehicle and to sell it if he chose to do so without accounting for  the  debt  secured.    If  the  vehicle  were  sold  the  appellant  would effectively remove any ability for Mr Chignell to enforce his security for the debt or would at least hinder him in doing so.

[28]     The expression “pecuniary advantage” is not defined in the Crimes Act.  The term “beneficiary” is defined in the Shorter Oxford Dictionary, (3ed), Vol II. as:

“1.  Consisting of money; exacted in money ….

2.   Of, belonging to, or having relation to money …

3.   Of which money is the object.

[29]     The  Shorter  Oxford  Dictionary  also  defines  the  term  “advantage”  as including a superior position or something which gives one a better position.  There can be little doubt that the transfer of the registered ownership of the vehicle back to himself, placed the appellant in a better position in monetary terms in that he was then able to dispose of the vehicle without hindrance and avoid repayment of the debt  from  the  proceeds.    Correspondingly,  Mr  Chignell  was  placed  in  a  worse position because he was then exposed to the risk of the appellant selling the vehicle without repayment of the debt or, at the least, he was placed in the position where it would be necessary for him to take Court proceedings to enforce the terms of the agreement.

[30]     Although we accept there are some factual differences between this case and

Smith, we accept the proposition adopted by Lord Rodger delivering the leading

speech in the House of Lords in which, at 372, he adopted the view of Laws LJ in

R v Dimsey (2000) All ER 142 at 145 that:

The  ordinary  and  natural  meaning  of  pecuniary  advantage  must  surely include the case where a debt is evaded or deferred.

[31]     We note also the view expressed by this Court in R v Gunthorp and Ors CA 46/93 9 June 1993 at 61.  There it had been submitted that one of the appellants did not obtain a pecuniary advantage by the substitution of one creditor for another. While it was accepted that this might normally be so, the advantage in the case before the Court lay in the terms available from the new creditor.  A clearly stated short-term contractual obligation as to duration of the loan and interest was replaced with one which was undefined.   Those terms could not have been obtained in the market place.  On that basis it was held that a pecuniary advantage had been obtained by the substitution of another creditor on more advantageous terms.

[32]     Other decisions of this Court such  as Ruka and R v Firth [1998] 1 NZLR 513 may be readily distinguished. Here, the appellant was not entitled to the vehicle in an unencumbered state nor did he have any entitlement in terms of the agreement with Mr Chignell to transfer ownership of the vehicle back to himself and thereby defer payment of the debt or to hinder or prevent Mr Chignell from recovery of the debt by realising on the vehicle as security.

[33]     We agree with Mr Johnstone that it does not matter whether the debt was owed by the company or by the appellant personally.  Section 228 does not require the Crown to prove that the appellant intended to obtain a pecuniary advantage for himself.  So long as there is an intention to obtain a pecuniary advantage, it may be that the advantage was intended for a third party.  That is clear from s 217 of the Crimes Act as Mr Johnstone submitted.  It was enough for the Crown in the present case to prove that in using the documents to transfer the vehicle registration back into his own name, he did so dishonestly with the intention of obtaining a pecuniary advantage either for himself or for the company and without any claim of right.

Conclusion on conviction appeal

[34]     For the reasons given the conviction appeal is dismissed.

Sentence appeal

[35]     In submitting that the sentence was manifestly excessive, Mr Callaghan’s main point was that there was an element of duplication between the two charges. He submitted that on totality grounds, the Judge ought to have substantially reduced the fine of $1,250 on each charge.  Mr Callaghan added that the appellant was a first offender.

[36]     We are not at all persuaded by these submissions.  Given the circumstances of the offending,  a custodial sentence would not have been out  of place.    The appellant’s conduct was plainly deceptive and  we would  assess  culpability at  a moderate to serious level.  On that basis, fines totalling $2500 may be regarded as modest.  They could certainly not be described as manifestly excessive.

[37]     The sentence appeal will also be dismissed.

Solicitors:

Cavell, Leitch, Pringle & Boyle for Appellant

Crown Law Office, Wellington