R v Douglas

[2012] NZHC 1467

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2010-004-022101 [2012] NZHC 1467

THE QUEEN

v

WAYNE LESLIE DOUGLAS NEAL MEDHURST NICHOLLS

Hearing:         23, 24, 26, 27, 30 April, 1, 2, 3, 4 May 2012

Counsel:         N Williams, S Symon and M Thomas for the Crown

B Gray QC, R Sussock and G Tompkins for the Accused

Judgment:      19 July 2012

REASONS FOR VERDICTS OF WYLIE J

Distribution:

N Williams: [e-mail] S Symon: [e-mail] M Thomas: [e-mail]

B D Gray QC: [e-mail]

R Sussock: [e-mail]

G Tompkins: [e-mail]

R V DOUGLAS & ANOR HC AK CRI 2010-004-022101 [19 July 2012]

INDEX

Paragraph

Introduction .............................................................................................................. 1

Judge alone trial ....................................................................................................... 5

Relevant rules of law and practice ......................................................................... 10

Overall factual setting ............................................................................................ 17 a)    Messrs Douglas and Nicholls — Capital + Merchant Finance Limited........ 18 b)    The Business of Capital + Merchant Finance Limited — The Trust Deed .... 33 c)    Loans made by Capital + Merchant Finance Limited ................................... 14 d)    Mr Stokes — His Interests .............................................................................. 47 e)    The Hub Properties ........................................................................................ 52 f)     The Loan Advances ........................................................................................ 64 g)    The Valuations ................................................................................................ 72 h)    The Redevelopment ........................................................................................ 76 i)     Increase in the Loan Advances — Guarantees Required — Deed of Trust

and Indemnity ................................................................................................. 78 j)     The Prospectuses ............................................................................................ 90 k)    Sale of Hub Properties to Capital + Merchant Finance Limited and

their subsequent on sale ................................................................................. 92

Count 1 ................................................................................................................. 102 a)    Did the accused have control over property? .............................................. 106 b)    Did the circumstances require each of the accused, Messrs Douglas

and Nicholls, to deal with the property in accordance with the

requirements of any other person?................................................................111 c)    Did the accused know of those circumstances? ............................................118 d)    Did Messrs Douglas and Nicholls intentionally deal with the property,

otherwise than in accordance with those requirements? ............................. 123

Count 2 ................................................................................................................. 188

a)    Did the accused make or concur in making or publishing prospectus

number 4 for Capital + Merchant Finance Limited? .................................. 191

b)Did the prospectus contain a statement that was false in a material particular?.................................................................................................... 194

Count 3 ................................................................................................................. 239

Conclusion............................................................................................................ 243

Introduction

[1]      Messrs Douglas and Nicholls were at all relevant times directors of Capital + Merchant Finance Limited.   They have been charged with three counts under the Crimes Act 1961 arising out of the affairs and ultimate demise of that company.  The details are as follows:

(a)      Count 1 is laid pursuant to s 220 of the Act.  It alleges what is known as theft in a special relationship.  It charges that Messrs Douglas and Nicholls, between 1 April 2002 and 30 September 2004, had control over $14,444,064.52  of  investor 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 the funds otherwise than in accordance with those requirements.

(b)Count 2 is laid pursuant to s 242 of the Act.…