R v Douglas - [2012] NZHC 3409

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2010-004-022101 [2012] NZHC 3409

THE QUEEN

v

WAYNE LESLIE DOUGLAS NEAL MEDHURST NICHOLLS

Hearing: 12 December 2012

Counsel: N Davidson QC and M Thomas for the Crown
B D Gray QC and R Sussock for the Prisoners

Judgment: 14 December 2012

[RESERVED] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 14 Dec 2012 at 10.15 am
Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Distribution:
NRW Davidson QC: Nicholas@davidsonqc.co.nz
M Thomas: Michael.thomas@sfo.govt.nz
B Gray: bdgray@shortlandchambers.co.nz
R Sussock: Rachel.sussock@wilsonharle.com

R V DOUGLAS & ANOR HC AK CRI 2010-004-022101 [14 December 2012]

Introduction

[1] Messrs Douglas and Nicholls were charged with three counts under the

Crimes Act 1961.

(a) Count 1 was laid pursuant to s 220 of the Act. It alleged that Messrs Douglas and Nicholls had control of $14,444,064.25 of investors’ funds, in circumstances that they knew required them to deal with the funds in accordance with the requirements of Perpetual Trust Limited, as trustee under a debenture trust deed dated
5 April 2002, and that they intentionally dealt with those funds otherwise than in accordance with those requirements.

(b)Counts 2 and 3 were laid pursuant to s 242 of the Act. They alleged that false statements were made in prospectuses. Count 2 related to a prospectus dated 30 June 2003, and count 3 related to a prospectus dated 10 September 2004.

All three counts arose out of loans made by a finance company controlled by Messrs Douglas and Nicholls, Capital + Merchant Finance Limited, to four separate companies associated with the purchase and development of a property portfolio situated in Palmerston North known as The Hub.

[2] In this judgment, I refer to the four separate companies that borrowed the monies from Capital + Merchant Finance Limited as “the borrower companies”, to the loans themselves as “The Hub loans”, and to the debenture trust deed between Capital + Merchant Finance Limited and Perpetual Trust Limited as “the debenture trust deed”.

[3] The trial took place before me sitting as a Judge alone. It commenced on

23 April 2012, and concluded on 4 May 2012.

[4] There was a further trial involving Messrs Douglas, Nicholls and another person involved with Capital + Merchant Finance Limited, which started shortly

after the conclusion of this trial. By agreement, verdicts on this trial were delayed until both trials were completed.

[5] The verdicts were given by me on 19 July 2012.[1] I found Messrs Douglas and Nicholls not guilty in relation to each of the counts in the indictment, and discharged them. I delivered lengthy reasons for verdict, setting out why I had concluded that Messrs Douglas and Nicholls were not guilty.

[1] R v Douglas & Anor [2012] NZHC 1467.

[6] On 16 August 2012, I received a memorandum from the Crown. The Crown asked me to reserve three questions of law, pursuant to s 380(1) of the Crimes Act.

[7] The three…

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 Douglas

Details

AGLC: R v Douglas [2012] NZHC 3409
Case: [2012] NZHC 3409
Decision Date: 14 December 2012

CaseChat Overview and Summary

Messrs Douglas and Nicholls were acquitted of charges relating to their control of investors' funds and making false statements in prospectuses. The Crown sought to reserve three questions of law for the Court of Appeal, which related to whether the loans to the borrower companies were related party transactions under the debenture trust deed, Financial Reporting Standard Number 9, and Statement of Standard Accounting Practice Number 22. Justice Wylie declined to reserve any questions of law, finding that he had not made the legal conclusions the Crown attributed to him. Rather, Justice Wylie had made factual findings based on the evidence presented at trial. The contemporaneous documentation and evidence of the Crown's own expert witness undermined the Crown's case that the loans were related party transactions. Justice Wylie declined to revisit the case as argued by the Crown at trial and found that it was not appropriate to reserve any questions of law for the Court of Appeal.

The final orders were that the Crown's application to reserve questions of law for the Court of Appeal be declined. No questions of law would be reserved for the opinion of the Court of Appeal. The acquittal of Messrs Douglas and Nicholls stood.

Orders