R v Edwards
[2004] NZCA 13
•3 March 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA152/03
THE QUEEN
v
ROY WILLIAM EDWARDS
Hearing:18 February 2004
Coram:O'Regan J
Goddard J
Paterson JAppearances: Appellant in Person
E M Thomas and B D Tantrum for Crown
Judgment:3 March 2004
JUDGMENT OF THE COURT DELIVERED BY O’REGAN J
[1] The appellant, Mr Edwards was convicted after a jury trial in the High Court at Auckland of:
(a)One charge that, being an undischarged bankrupt and without reasonable cause and without the consent of the Official Assignee or the court, he took part in the management or control of the business of the Worldwide Beer Club Limited (Worldwide).
(b)Eleven counts of using a document to obtain a valuable consideration or pecuniary advantage with intent to defraud.
(c)One charge of attempting to use a document for the purpose of obtaining a pecuniary advantage with intent to defraud.
[2] The trial Judge, Rodney Hansen J, sentenced Mr Edwards to one year’s imprisonment on the first count, five years imprisonment on each of the 11 counts of using a document, and two years imprisonment on the count involving an attempted use of a document. All those terms were concurrent. In addition, the Judge sentenced Mr Edwards on a separate charge of taking part in the management or control of another business, Flick Life Protection Installers, to which he had pleaded guilty. Mr Edwards was sentenced to a term of imprisonment for six months on that charge. The six month term was cumulative on the five year concurrent terms in respect of the offending involving Worldwide.
[3] Mr Edwards now appeals against his convictions, and also appeals against the sentence imposed in the High Court.
Application to adduce evidence
[4] In October 2003 Mr Edwards filed an application to this Court to adduce further evidence in support of this appeal against conviction and sentence. In particular he sought to adduce the following:
(a)An original brief of evidence of an expert accountant, who gave evidence on behalf of Mr Edwards, Mr David Ross, which showed amendments of which were made to that brief as a result of certain rulings made by the trial judge;
(b)Tapes of conversations and discussions between Mr Edwards and Mr L N Bassett, who was a director of Sam Malones Ltd (SML) which was closely allied to Worldwide and also the director of Worldwide, Ms Jennifer Dench. He also sought to adduce transcript of these tapes; and
(c)A statement of evidence as to the interview of Jennifer Dench by an investigator from the New Zealand Insolvency and Trustee Service (NZITS), Mr Thompson. This interview took place on either 1 or 2 February 2001.
[5] The Crown opposed the application.
Points on appeal
[6] Mr Edwards’ appeal was based on four grounds. These were:
(a)The evidence of the expert witness called on the part of the defence, Mr David Ross, was inappropriately censored by the trial judge;
(b)Fresh evidence is available which would, if heard by the jury, have affected their evaluation of the credibility of a prosecution witness, Mr Bassett;
(c)The record of the statement of Ms Dench made to Mr Thompson on 1 or 2 February 2001 is fresh evidence which, if presented to the court, would have affected the jury’s perception of the credibility of Ms Dench, who was a key prosecution witness; and
(d)The Judge failed to direct the jury that, in relation to counts 6-15, the jury had to be satisfied beyond reasonable doubt that Mr Edwards knew he came within the terminology “any of its [Worldwide’s] Directors/Executive Officers/Principals”.
New evidence
[7] The application to adduce new evidence relates to three categories of material.
[8] The first category comprises:
(a) the original brief of Mr Ross, which was the subject of the ruling by the trial judge (Ruling No 7), which set out matters which were improperly included in the brief and which the Judge determined should be omitted from it;
(b) a copy of the brief which was the subject of Ruling No 8 and which was, with the exception of certain paragraphs which were dealt with in that ruling, read to the jury as part of Mr Ross’s evidence-in-chief.
[9] This material is part of the court file and in that sense is not new evidence at all. We have taken it into account in reaching our decision on this matter, but it is not necessary to admit it as fresh evidence for that purpose. Accordingly, that part of the application to adduce new evidence does not need to be dealt with.
[10] The next category of new evidence is the transcripts and tapes relating to the conversations with Mr Bassett. This material was submitted in support of Mr Edwards' submission that the appeal should be granted on the ground that there had been a miscarriage of justice because this evidence, which he argued was fresh evidence, had not been placed before the jury. That application requires the court to consider whether the evidence is indeed fresh evidence and whether its cogency is such that the appeal should be allowed and a new trial ordered. We will deal with those issues in the context of the substantive appeal.
[11] The same comment applies to the third category of new evidence, namely the record of the statement made by Ms Dench to Mr Thompson on 1 or 2 February 2001.
Substantive appeal
[12] We now turn to the substantive appeal and deal with the four grounds of appeal in the same order in which they were raised by Mr Edwards.
Brief of Mr Ross
[13] Mr Edwards submitted that the Judge had severely watered down the brief of Mr Ross, particularly his references to the key issue as to the solvency of Worldwide at the times which were material to the charges, and that this had weakened the defence case and led to a miscarriage of justice. This submission focuses attention on two of the trial judge’s rulings, Ruling No 7 and Ruling No 8.
[14] The background to Ruling No 7 was that Mr Ross commenced giving his evidence and, after he had spent some time giving his evidence-in-chief, the Judge expressed some concerns about aspects of this evidence and whether the evidence was in an appropriate form for evidence from an expert witness. As a result of this, defence counsel agreed to provide Mr Ross’s brief to Crown counsel so that issues of concern could be resolved between counsel. The Judge said that the motivation for this was to ensure that Mr Ross could complete his evidence without unnecessary interruptions for rulings to deal with any objections which may be raised by the Crown.
[15] As a result of the discussions between counsel, Mr Ross prepared an amended brief, but this contained a number of passages with which Crown counsel continued to take issue and, accordingly, counsel invited the Judge to rule on the admissibility of those passages. The Judge made it clear that his role was confined to issues of admissibility and that he was not attempting to censor or edit Mr Ross’s brief. The Judge ruled that considerable portions of the brief indicated that the expert was intending to give expert evidence on facts which did not have a proper evidential foundation, to speculate on certain matters, or to deal with issues which were hypothetical.
[16] The point with which Mr Edwards took particular issue in this Court was the Judge’s comment about uncalled capital and its relevance to the solvency of Worldwide. In Ruling No. 7, the Judge expressed some reservation about Mr Ross’s proposed evidence on that point. He said he had some difficulty in understanding how a hypothetical possibility of a call on shares could have any sensible bearing on the solvency of Worldwide during the material period. He made it clear that he was not excluding references to the topic, but said that Mr Ross should make it clear to the jury that the ability of a company to pay its debts and its assets and liabilities situation would be affected only if a call had been made and paid.
[17] Mr Edwards made particular reference to evidence which Mr Ross proposed to give about the liability of a trustee to meet a call, even if the trust assets were insufficient to do so, if the trustee holds unpaid or partly paid shares as trustee and a call is made.
[18] The Judge commented on that as follows:
Paragraph 62 addresses the question of whether a trustee is personally liable for a call on capital. Unless that proposition is uncontroversial, that is, it is accepted by the Crown, it should not be put forward. It is an opinion, which the witness is not qualified to express.
[19] Mr Edwards said that the Judge was wrong in this finding and argued that it had a significant impact on the conduct of the trial. We do not think there is anything in that point. The statement which Mr Ross intended to make was essentially a statement of law, which was a matter for submission by counsel and a ruling by the Judge, if necessary. The decision not to allow Mr Ross to express a view on that legal issue did not have the effect of preventing the point being made to the jury, if it had relevance to the issues being considered by the jury, because it could easily have been the subject of legal submission.
[20] More importantly, there does not seem to us to be any basis on which it can be argued that this point was significant in the context of the trial, because the jury did not have before them evidence of the persons who would have been liable as trustees if a call had been made on the partly paid shares in Worldwide. Those shares were held by the Hunter Pritchard Trust. It was clear that Ms Dench was one trustee of that trust, but the identity of any other trustee (if there was another trustee) was not disclosed in evidence. Accordingly, the statement was made in something of a factual vacuum and had no practical significance in the context of the case.
[21] After Mr Ross’s brief had been amended to deal with the matters covered by the trial Judge’s Ruling No. 7, there remained certain paragraphs dealing with calls on unpaid shares to which the Crown continued to take objection. This meant that it was necessary for the Judge to hear argument and make another ruling, Ruling No. 8.
[22] In that ruling the Judge recorded that there was no issue that there had not been any calls made at the time the company went into liquidation. He said there was therefore never any prospect of unpaid capital being available to the company during the material time. He noted that the question of insolvency in relation to Worldwide was an issue which the jury was required to consider in determining whether or not an intent to defraud had been made out, and that that required the jury to take into account Mr Edwards’ knowledge of the company’s financial position. He said because no calls had been made, the issue of unpaid capital could never have come into the reckoning and was therefore irrelevant to the jury’s assessment of whether Mr Edwards acted deliberately and dishonestly, as required to establish the necessary intent to defraud.
[23] In view of that conclusion the Judge said it would serve only to distract jurors from the critical factual issues to introduce a controversial subject on which even the experts differed. He therefore directed that the paragraphs dealing with calls be excluded from the brief. Mr Edwards said that this hindered his defence because it prevented the jury from considering whether the possibility of the company making calls on unpaid shares could have meant that it was solvent at the relevant time.
[24] We have considered carefully the material that was deleted from Mr Ross’s brief, the evidence he gave about calls on unpaid shares in his evidence-in-chief, and the evidence given by the two accounting witnesses for the Crown, Mr Covacich and Mr Kelso. Having done so, we are unable to accept Mr Edwards’ submission.
[25] The paragraphs about uncalled capital which were deleted from Mr Ross’s brief as a result of Ruling No. 8, were expressed in equivocal terms. Mr Ross referred to the capital structure of the company and the amount of uncalled capital, expressed the view as to the liability of trustees and then indicated that he had no knowledge from the evidence that he had heard during the case as to the identity of the trustees of the Hunter Pritchard Trust. He said he understood that Ms Dench was one trustee but did not think there was any evidence as to who the other trustee was. He then commented “clearly the ability to include the unpaid capital for measurement of solvency is contingent on the ability to collect those funds”. Later, he set out a list of factors which were areas requiring consideration to determine solvency of Worldwide in the period between October 2000 and January 2001. One of those factors was “the ability to collect uncalled or unpaid capital of approximately $300,000”.
[26] In his evidence-in-chief, Mr Ross was asked about uncalled capital notwithstanding the deletion of the paragraphs in the brief, which he was in the course of reading to the court. He was asked the following question” “So from the perspective of the Worldwide Beer Club, what would be the expectation if and when a call was made as far as any uncalled capital was concerned?”He answered: “Clearly the expectation must be from a company’s point of view that if a call is made either by the directors or by a liquidator or by the shareholders themselves, that the full amount of the unpaid capital would be paid to the company itself, so on day one if a call had been made and the shareholders had written cheques, their obligation, the company would have started off with $400,000 in the bank”.
[27] In addition, Mr Covacich and Mr Kelso, who were accountants who gave evidence for the prosecution, had been asked in cross-examination about uncalled capital. Mr Covacich had been asked whether the Hunter Pritchard Trust would be liable for any calls outstanding on shares held by the trust and confirmed that that would be so. He was also asked if the trustees would be personally liable and confirmed that position. At that point the Judge intervened and asked him whether he held himself out as having expertise in the area of legal liability of trustees and he said that he would normally seek legal advice on questions of that nature. Later he was asked about buying the B shares in the company and whether if a call had been made in respect of those shares, the shareholders would have been liable to contribute $200,000. His answer was “yes if they are capable of paying”. He was then asked whether there was a substantial amount of money receivable by the company more than disclosed in the company’s accounts, to which he answered. “Technically yes, in reality most probably no. If you were going to have a contingent liability the value of that asset is as good as the ability of the person to pay it and, if that ability is zero, the value of the uncalled capital is most probably zero as well”. [It seems likely that the reference to contingent liability was intended to be a reference to a contingency asset].
[28] Mr Kelso was also asked about the uncalled capital in cross-examination. In particular there was the following exchange: “So, if there is unpaid substantial unpaid capital, do you agree that that would be relevant in determining the solvency of the Worldwide Beer Club?” Answer, “It’s relevant but also relevant would be whether that would be paid physically or able to be paid”.
[29] It is clear that the information placed before the jury by the prosecution witnesses in cross-examination was that uncalled capital could be relevant to the determination of the solvency of Worldwide if the call had been made and the party on whom the call was made was able to pay. We do not believe that the Judge’s rulings about Mr Ross’s evidence affected that. Mr Ross did not propose to give evidence that a call had been made, or identify the party or parties who would be liable for a call. His proposed evidence was hypothetical. We agree with the Judge that it would not have assisted the jury, and, in any event, it would have added nothing to the evidence which the jury had before them from Mr Covacich, Mr Kelso and Mr Ross himself.
[30] Mr Edwards also took issue with the Judge’s ruling about the schedules to Mr Ross’s brief. Each of those schedules was presented to the jury as an exhibit. The focus of Mr Edwards’ submission was Schedule 8, which became Exhibit Z. In Ruling No. 7, the Judge ruled that the notes to these schedules should be deleted from the versions produced as exhibits. He said that any necessary qualifications to the figures contained in the schedules should be given in evidence-in-chief.
[31] In Schedule 8, as it appeared in the original brief of Mr Ross, there had been a note which said “If an allowance is made for the unpaid share capital, that was approximately $300,000 at 31 March 2000 and approximately $250,000 at 31 December 2000, then there would be positive shareholders equity at all relevant dates”. Mr Edwards said Mr Ross should not have been required to exclude this information from the exhibit.
[32] It is notable that the Judge’s ruling in relation to the notes to the schedules made it clear that he was not preventing any of the information contained in those notes being presented to the jury but was rather ruling on the method by which that information should be provided to the jury. We agree with the Judge that where a witness proposes to give evidence explaining matters shown in an exhibit, the witness should do so as part of his or her sworn evidence rather than purporting to give evidence in writing in the exhibit itself. We can see no basis for criticism of the Judge’s ruling.
[33] It is notable that Mr Ross did give evidence about a number of other matters contained in the notes to the schedules, although he did not specifically make a statement reflecting the content of the note in the original Schedule 8 about calls. There was nothing in the Judge’s ruling that prevented him from doing so.
[34] For the above reasons we reject the first ground of appeal.
Tapes and transcripts of conversations with Mr Bassett and Ms Dench
[35] Mr Edwards taped four telephone calls between himself and Mr Bassett in the period from 16 February 2001 to 22 March 2001. Ms Dench was also involved in one of these calls which took place on 28 February 2001. Mr Edwards had made copies of these tapes and had given the copies to the Police Fraud Squad in support of complaints made by certain franchisees against Mr Bassett. He had kept the original tapes. Prior to the trial his counsel sought discovery of the copy tapes from the police. There was much correspondence between Mr Edwards’ counsel and the police about the whereabouts of the tapes. The police had apparently found the tapes inaudible and had not transcribed them. Eventually Mr Edwards’ counsel was advised by the police that the tapes had been mislaid. They were never provided to Mr Edwards or his counsel.
[36] Mr Edwards said that he tried to locate the original tapes before his trial but that he was unsuccessful in doing so. He said that he eventually found them after the trial. He then arranged for parts of the tapes containing information which the thought was relevant to his case to be enhanced and for transcriptions to be made. Copies of the enhanced tapes and the transcriptions were exhibited to his affidavit.
[37] Mr Edwards says that the tapes were relevant to his defence because:
(a)Certain statements made by Mr Bassett in the tapes could have been used to challenge Mr Bassett’s credibility;
(b)Mr Bassett referred to a sum of $40,000 owing by Worldwide to SML as being a loan, whereas the evidence before the jury was that this sum had been illegally taken by Mr Edwards from SML. Mr Edwards said this put him in a bad light with the jury;
(c)The conversations included comments by Mr Bassett which could be interpreted as indicating that Mr Bassett had been responsible for some overstatement of the amount which Worldwide owed to SML. This could potentially have affected Worldwide’s solvency position; and
(d)References by Ms Dench on the tapes would have supported Mr Edwards’ contention that he was, in fact, only an employee of Worldwide and not a participant in its management. This was relevant to the first count in the indictment, and also the fraud charges, because Mr Edwards said he was only an employee and therefore not aware of Worldwide’s financial situation.
[38] In effect Mr Edwards’ submission to us was that a miscarriage of justice had occurred because fresh evidence was now available which would, if it had been presented to the jury, have led to a different verdict on some or all counts.
[39] The position in relation to fresh evidence was summarised by this Court in R v Zachan (CA304/94, 11 August 1995). In that case, Hardie Boys J, giving the judgment of the Court, said:
The Court has jurisdiction to allow an appeal on the ground of the discovery of fresh evidence by virtue of s385(1)(c) of the Crimes Act 1961. This provides that an appeal against conviction is to be allowed if the Court is of the opinion that on any ground there has been a miscarriage of justice. The Court will normally require that the evidence be fresh in the sense that it was not available at the trial; and that it be credible and cogent in the sense that if given along with the other evidence in the case, the jury might reasonably have been led to return a different verdict. The overriding test however is the interests of justice. See R v Fryer [1981] 1 NZLR 748, R v Arnold [1985] 1 NZLR 193, R v Crime Appeal (CA 60/88) (1988) 3 CRNZ 512.
[40] In our view Mr Edwards’ case founders on the fact that the evidence is not in fact fresh. It is clear that the original tapes were retained by Mr Edwards throughout and it was only his inability to locate them that prevented the information contained in the tapes from being used during the course of his trial. The fact that copies of the tapes existed and were in the possession of the police, but later mislaid, does not alter the fact that the originals remained under Mr Edwards’ control throughout.
[41] Mr Edwards acknowledged that there was no real excuse for his not having used his own copies of the tapes. He said that he had been in ill health at the time, had engaged a new barrister and had just received a large amount of documentary material from the prosecution by was of discovery. He said that he had been dealing with Mr Ross on a daily basis and had not given a second thought to the fact that he had the originals of the tapes himself, partly because he thought that Mr Ross’s evidence would be sufficient to meet the prosecution case. This provides confirmation of our view that this evidence cannot be considered to be “fresh”.
[42] Even if the evidence were considered to be fresh, we do not accept that it would have made a material difference to the conduct of the trial or that any substantial miscarriage of justice arose from the inability of the defence to use the evidence in the course of the trial. Mr Edwards said that the evidence could have been used to impugn the credibility of Mr Bassett. This would have reinforced the warning which the Judge gave to the jury in his summing up to treat Mr Bassett’s evidence with caution because he was hostile to Mr Edwards. However, Mr Edwards acknowledged that he and his counsel had determined that it would not be appropriate to use information which could have formed the basis for such an attack on Mr Bassett’s credibility because of the danger that this would have meant that Mr Edwards’ own credit was put in issue.
[43] Mr Edwards had what the Judge described in his sentencing notes as “a record of dishonest business dealings going back over 20 years”. It was obvious that there could be significant prejudice to him if this was to become known to the jury. Accordingly, even if he had had available to him more information providing a basis for an attack on the credit and reputation of Mr Bassett, there does not seem to have been any prospect that the information would have been used for that purpose.
[44] The question of the status of the $40,000 which Mr Bassett said had been stolen by Mr Edwards from SML was the subject of extensive cross-examination during the course of the trial. We do not believe that disclosure of the comments made by Mr Bassett in the telephone conversation which was taped about that money being treated as a loan would have been seen as particularly material because Mr Bassett had already acknowledged that the $40,000 was treated as a loan in the books of SML.
[45] Mr Edwards said that the reference on the tape by Ms Dench to the payment of wages to him provided support for his contention that he was in reality only an employee of Worldwide and not involved in its management. In fact, there was only one brief mention on the tape by Ms Dench of the possibility that Mr Edwards owed tax on wages paid to him by Worldwide. This would not have added anything to the defence case because there was already ample evidence before the jury that Mr Edwards had occupied the position of employee in the company, in a formal sense. An issue before the court was whether, despite that apparent lowly status, he was in reality participating in the management of Worldwide. Accordingly, even if this evidence had been fresh we do not believe it would have had any impact on the jury’s consideration of that issue.
[46] We therefore find that the second ground of appeal fails.
Statement of evidence of Ms Dench
[47] On 21 June 2001, NZITS provided to Mr Edwards’ counsel, by way of disclosure, a copy of a statement of evidence of Ms Dench, which had been prepared by Mr Thompson of NZITS. The statement did not disclose the date on which the interview leading to the preparation of the statement took place. The NZITS letter referred to the statement as a synopsis of an interview with Ms Dench on 23 June 2000. The background to the disclosure of this statement was somewhat tortuous. Counsel for Mr Edwards had received a copy of notes kept by Mr Thompson which recorded that Mr Thompson had a meeting with Ms Dench on 1 February 2001. Counsel requested a copy of any written record or tape recording of that meeting and of any other meetings or telephone conversations with her. He also requested a transcript of the 23 June 2000 interview of Ms Dench by NZITS.
[48] In a reply dated 17 August 2001, NZITS said that it had previously not had a transcript of the interview with Ms Dench on 23 June 2000, but that it had now been obtained. A copy was provided. However, the letter also contained a statement to the effect that there was no written record or tape recording of Mr Thompson’s meeting with Ms Dench on 1 February 2001.
[49] Mr Edwards’ counsel replied to NZITS on 24 August 2001. He noted that the initial disclosure of 21 June 2001 included an undated narrative statement of Ms Dench. He said that that statement inferred that there had been a meeting between an investigator and her which gave rise to that statement. He requested advice as to who took the statement, the date of taking it, and copies of any notes on computer or paper made by the investigator concerned. NZITS responded on 28 August 2001 to the effect that Mr Thompson had drafted the unsigned and undated narrative statement of Ms Dench. The NZITS investigator who wrote the letter, Ms Grass, said that she understood that the statement had been drafted from the recorded interview between him and Ms Dench on 23 June 2000.
[50] It is clear that Ms Grass’s understanding was incorrect and that the statement was in fact a record of the interview between Ms Dench and Mr Thompson on 1 or 2 February 2001. In argument, Mr Edwards acknowledged that it was clear to him and his counsel that the statement did not relate to the meeting of 23 June 2000 because in the statement Ms Dench refers to the sale of franchises to a number of parties which took place after she had her interview with NZITS in June 2000. Thus, he knew that the statement related to a much later meeting but did not know that it was a meeting which took place on 1 or 2 February 2001.
[51] Crown counsel, Mr Thomas, argued that the statement of the February 2001 meeting was not fresh evidence because it is clear that it was in possession of Mr Edwards and his counsel well before the trial. He accepted that the NZITS had indicated that the statement did not relate to a meeting in February 2001 but said that the date on which the interview to which the statement referred to took place was not significant in itself.
[52] Mr Edwards said that the significance of the statement was that Ms Dench referred in it to the fact that Mr Edwards was an employee of Worldwide and also said that the establishment of Worldwide was her idea. Ms Dench had made similar statements at the June 2000 meeting but later recanted them in a meeting with the NZITS in April 2001. She was of course cross-examined about this. During the trial she acknowledged that what she had initially said to NZITS was false but said that she had given this false information because Mr Edwards was pressuring her, and telling her what to say. She acknowledged that she now took a completely different view of those issues and said it was because of Mr Edwards’ behaviour and the way he had treated her.
[53] Later in her cross-examination Ms Dench said that she had given false information to NZITS in the June 2000 interview on Mr Edwards request. She also told counsel for Mr Edwards that she had had several interviews with Mr Thompson of NZITS.
[54] Mr Edwards said that it would have helped his counsel to undermine the credibility of Ms Dench if he had been able to put to her the fact that she had said that Mr Edwards was a mere employee and that she was managing the Worldwide business not only at the June 2000 meeting but also at a later meeting, namely, the meeting in February 2001. While there may have been some marginal additional benefit, we cannot see why the failure of NZITS to identify the date of the meeting to which the statement related prevented Mr Edwards’ counsel from doing this. Mr Edwards knew the statement related to a meeting which must have happened well after the June 2000 meeting. It was open to Mr Edwards’ counsel to put to Ms Dench that she had also told Mr Thompson that she was managing Worldwide and that Mr Edwards was only an employee of Worldwide, at both the June 2000 interview and also at a later meeting, albeit that he would not have been able to refer specifically to the date of the later meeting.
[55] We conclude that the evidence cannot be categorised as fresh evidence and that, even if it were, its significance is not such that any inability of counsel to make use of it could have led to a miscarriage of justice. Accordingly, this ground of appeal fails.
Franchise disclosure document: summing up
[56] The fourth ground of appeal relates to clause 4 of the franchise disclosure document which was provided to potential franchisees of Worldwide. Counts 6-15 of the indictment involve allegations that Mr Edwards used franchise disclosure documents which were provided to potential franchisees of Worldwide for the purpose of obtaining a benefit of or pecuniary advantage (the initial franchise payment required from the franchisees) with intent to defraud them.
[57] Clause 4 of the franchise agreement says:
Details of any Materially Relevant Debt, Administrative, Criminal or Civil Proceedings or Bankruptcy/Insolvencies (Past or Pending) Concerning the Franchisor Company or any of its Directors/Executive Officers/Principals: NIL
[58] Mr Edwards submitted that the Judge had not directed the jury that they needed to be satisfied that he was aware that he was a Director/Executive Officer/Principal of Worldwide in order to convict him in relation to counts 6-15 of the indictment. That submission appears to be founded on the premise that Mr Edwards could have known that the statement “Nil” at the end of clause 4 was false only if he was a Director, Executive Officer or Principal of Worldwide. In our view that premise is not correct.
[59] The Judge made it clear to the jury that the Crown had to satisfy the jury that Mr Edwards knew that the statement “nil” as it appeared after cl 4 of the disclosure document was incorrect. For example, in para [49] of the summing up, the Judge said “First, Mr Johnstone [Crown counsel] said that Mr Edwards knew what was in that document [the franchise disclosure document]. Second, that what was in that document was wrong at a number of different respects. Although he knew that it was incorrect, Mr Edwards went ahead and used the document anyway”.
[60] In para [50] of his summing-up the Judge set out the Crown’s contention that the franchise disclosure document misrepresented the true position in stating the word “nil” in response to cl 4, in a number of different respects, namely:
(a)There was a substantial debt ($100,000) owed to Mr Mellor in relation to shares that he had purchased – that transaction was the subject of count 5 of the indictment – as well as other debts, including Worldwide’s debt to SML which, the Judge noted, was a matter of dispute;
(b)There were civil proceedings instituted by a Mr Ranchod which had not been disclosed to some of the later franchisees at a time when the Crown said Mr Edwards was aware of them;
(c)Worldwide itself was insolvent at the time of the use of the disclosure document in at least some of the cases; and
(d)Mr Edwards was bankrupt himself.
[61] The fact that Mr Edwards was bankrupt would require disclosure only if he was a Director or Executive Officer or Principal of Worldwide. Mr Edwards said the Judge ought to have defined those terms for the jury. We do not think that was necessary. It is clear from the verdict on count 1 that the jury found Mr Edwards was involved in the management of Worldwide, which would have meant he was an executive officer, as that term is commonly understood.
[62] The Judge summarised the Crown case which was to the effect that the omission to make reference to all or any of those four categories of matter which bore on the financial position of Worldwide established the factual framework from which it could be inferred that Mr Edwards intended to defraud the potential franchisees referred to in count 6-15.
[63] Later in summarising the Crown case, he said:
In relation to the various charges of intent to defraud, [the Crown counsel] contended that in each case Mr Edwards must have known that the documents which he was using to help obtain money from the named persons were false, that they would convey a false impression and he went ahead and did it and on that basis there is ample evidence for you to find that there was intent to defraud in each case.
[64] In summarising the defence submissions the Judge said:
In relation to the critical issue of fraud, [the defence counsel] said the bottom line is that you have to be satisfied that Mr Edwards knew of the financial position of the company, that he knew of the civil proceedings, that he knew of the various matters of fact which the Crown contends were omitted from the franchise disclosure document.
[65] In our view, these extracts from the summing up made it quite clear to the jury that they needed to be satisfied that Mr Edwards knew that the disclosure document was false in the respects identified by the Crown or at least in one or more of those respects. While Mr Edwards’ case was that he was only the employee of Worldwide and would not have known this information the jury’s verdict on count one (guilty of having taken part in the management or control of the business of Worldwide) indicates that they did not accept Mr Edwards’ position on that issue.
[66] We are satisfied that the Judge’s summing up made it clear to the jury that they needed to be satisfied that Mr Edwards knew that the answer “nil” provided after point four in the franchise disclosure document was false and misleading in at least one of the respects identified by the Crown. We therefore determine that this ground of appeal also fails.
[67] As all grounds of appeal against conviction have failed, we dismiss that appeal.
Appeal against sentence
[68] Mr Edwards was sentenced not only in relation to the charges of which he was convicted by the jury but also in relation to an additional charge in respect of which he pleaded guilty, namely a charge of taking part in the management or control of a business while an undischarged bankrupt. The charge to which he pleaded guilty to related to a business known as Flick Life Protection Installers, which Mr Edwards established while he was on bail after being charged in relation to the Worldwide matters.
[69] Mr Edwards was sentenced to a total of five and a half years imprisonment. He was sentenced to a term of one year imprisonment in relation to count 1 (being involved in carrying on the Worldwide business while a bankrupt), five years imprisonment on each of counts 3, 5-8 and 10-15 (using a document with intention to defraud) and two years in relation to count 9 (attempting to use a document with intent to defraud). All of those terms were concurrent which meant that the total term of imprisonment for the charges of which he had been found guilty by the jury (ie. those relating to Worldwide) was five years.
[70] The Judge sentenced Mr Edwards to a term of imprisonment for six months for the charge relating to Flick Life Protection Installers. He noted that this charge was of a lesser gravity than some of the other charges but said a deterrent sentence was required, because of Mr Edwards’ contemptuous disregard of the law.
[71] The six month sentence imposed in respect of the Flick matter was made cumulative on the concurrent five year sentences for the Worldwide matters.
[72] Mr Edwards submitted that:
(a)The effective sentence of five and a half years on the Worldwide and Flick matters (when taken in the context of offences which have maximum penalties of seven years imprisonment) was manifestly excessive. He cited a number of cases in support of that submission;
(b)He has been sentenced on unrelated matters to a further 18 months imprisonment which is cumulative on the terms imposed in relation to the Worldwide and Flick offending. He said that although these charges were unrelated, he believed that the sentence imposed in respect of them should have been concurrent and indicated that he had met a number of other prisoners who had been in a similar situation and had received concurrent sentences;
(c)The Judge did not give sufficient weight to mitigating factors such as his health, his age and life expectancy and his offer to send letters of remorse to the victims who were in court on the day of sentencing;
(d)The Judge did not refer in his sentencing notes to any credit in relation to the Flick sentence for the fact that Mr Edwards had entered an early guilty plea on that charge. He argued that there should have been a sentence of conviction and discharge or a reduced custodial sentence cumulative on the Worldwide sentences in relation to the Flick offending.
[73] We will deal with each of those grounds of appeal in the same order as they were raised by Mr Edwards.
Manifestly excessive
[74] Mr Edwards provided us with a list of cases which he said demonstrated that lower custodial sentences had been given by this Court and the High Court for offending having similar characteristics.
[75] The Judge referred to both R v Clarke (CA364/99, 23 November 1999) and R v Prestney (CA204/02, 1 October 2002), which involved fraudulent schemes resulting in losses of similar scale to those which occurred in the present case. He noted that those cases indicated a starting point of between four and five years imprisonment was appropriate. In Clark this Court reduced a sentence of four years imprisonment imposed in the District Court to three years imprisonment, but indicated that the starting point of four to five years was appropriate. The Court did not accept that a four year sentence was appropriate in that case in view of the scope of offending and the plea of guilty, saving the inevitable expense of trial. Of course, there was no guilty plea in relation to the Worldwide offending in this case.
[76] In R v Prestney a sentence of four years imprisonment was imposed in the District Court in relation to six counts of theft by fraudulent conversion and one count of fraudulent use of a document. In that case the amount involved in the fraudulent conduct was just over $800,000 though about $400,000 was recovered so that the net losses to the complainants was in the order of $400,000. This Court rejected Mr Prestney’s appeal against that sentence.
[77] In the present case the total loss to the victims was somewhere between $496,000 and $540,000. The Judge noted the particularly devastating effect the frauds had had on the victims, a number of whom suffered from disabilities or had suffered serious reversals in life. The Judge noted that the victims had been vulnerable and that Mr Edwards had exploited them mercilessly.
[78] Crown counsel submitted that the cases provided to us by Mr Edwards did not substantiate the proposition that the sentence in this case was inconsistent with sentences imposed in other cases. He pointed out that a number of the cases dealt with offenders who had pleaded guilty and therefore obtained significant benefit from having done so. Other cases involved losses to victims which were of a lesser magnitude than the losses suffered in this case. Having considered each of those decisions we accept the Crown counsel’s submission.
[79] Having taken a starting point of four to five years the Judge then considered aggravating and mitigating factors. He concluded that the aggravating factors were considerable, namely:
(a)the amount of the loss;
(b)the blatant dishonesty of the means by which Mr Edwards extracted the money from victims;
(c)the devastating effect of the fraud on the victims;
(d)Mr Edwards’ previous convictions for similar offending which the Judge said indicated that he had shown utter contempt for the law. He noted that Mr Edwards was running Worldwide while serving periodic detention for previous offending; and
(e)The personal benefit which he and Ms Dench, his co-offender, sought and obtained from the offending.
[80] The Judge then considered mitigating factors. First, he considered the question of remorse but he expressed scepticism about Mr Edwards’ expressions of remorse. He noted Mr Edwards poor health and accepted that imprisonment may cause him somewhat greater hardship than it would for a younger or fitter person. He said that he would make some allowance for Mr Edwards’ health, but that deterrence and the interests of the victims required that such allowance be kept to a minimum.
[81] In our view, the term of imprisonment imposed by the Judge for the Worldwide offending (five years) was within the range available to him for the offending. We accept that the sentence was at the upper end of that range, but in our view, there is nothing to suggest that the sentence is manifestly excessive, when considered against the cases cited to us by Mr Edwards and by Crown counsel.
[82] Although it was not explicitly raised as a ground of appeal, Mr Edwards argued that there was an undue disparity between the sentence imposed on his co-offender Ms Dench and the sentence imposed on him. Ms Dench pleaded guilty to one charge under s128A(1)(b) of the Insolvency Act and nine charges under s229A of the Crimes Act. She was sentenced to imprisonment for two years and given leave to apply for home detention. She appealed to this Court against that sentence. The appeal was rejected in this Court.
[83] In its judgment, this Court noted that the sentencing Judge had identified a number of mitigating features in Ms Dench’s case. These were:
(a)She was not the main force, rather Mr Edwards was the main force but the court found that the scheme could not have operated without Ms Dench’s involvement;
(b)Her personal life had from an early age had a history of disasters, such as broken marriages/relationships, addiction to alcohol, drug dependency, and periods of depression and despondency;
(c)She had no previous convictions of any sort;
(d)She had a good job and good references from her employer;
(e)She had no assets;
(f)Most importantly, she had accepted responsibility at an early stage, offered assistance to the authorities (including her commitment to give evidence against Mr Edwards) and had made an early guilty plea.
[84] The Judge addressed his mind to the issue of disparity. He concluded that the sentence to be imposed on Mr Edwards would not be out of keeping with the sentence imposed on Ms Dench. He noted numerous points of distinction particularly:
(a)Mr Edwards was the prime mover, whereas Ms Dench played a subservient role, both in the conception and execution of the business plan;
(b)Ms Dench had no previous convictions;
(c)Ms Dench’s personal circumstances were quite different from those of Mr Edwards; and
(d)Ms Dench accepted responsibility at an early stage which the Judge noted was a significant distinction from Mr Edwards case, given that Mr Edwards had maintained his innocence and put the victims through the additional trauma of giving evidence against him in court.
[85] In our view the analysis of the distinctions between this situation of Ms Dench and that of Mr Edwards by the sentencing Judge was correct, and the sentence imposed on Mr Edwards was not such that any undue disparity existed between that sentence and the sentence imposed on Ms Dench.
[86] Accordingly the first ground of appeal against sentence fails.
Cumulative sentences
[87] The second ground of appeal against sentence is that the subsequent 18 month cumulative term means that Mr Edwards now faces a total term of 7 years imprisonment and that this is excessive. It is clear, however, that any concern which Mr Edwards has about the 18 month term of imprisonment for the unrelated offending could only be dealt with by this court in the context of an appeal against that 18 month sentence. Accordingly that ground of appeal against sentence also fails.
Mitigating factors
[88] Mr Edwards said that the Judge did not give sufficient weight to mitigating factors as required under s10 Sentencing Act 2002. He highlighted in particular, as mitigating factors, his poor health, his age and life expectancy, and his offer to send letters of remorse to the victims who were in court at the time of the sentencing. It is clear from the Judge’s sentencing notes that he did make an allowance for Mr Edwards’ ill-health. He noted that imprisonment would cause greater hardship to Mr Edwards than it would to a fitter and younger person so it seems that age was also implicitly taken into account as a mitigating factor. The Judge noted Mr Edwards’ expressions of remorse but indicated that he was deeply sceptical of Mr Edwards’ expressions of contrition. In those circumstances he made no allowance for this as a mitigating factor. In our view that was an assessment which was open to the Judge. We are not persuaded that any greater allowance for mitigating factors should have been made, and we therefore reject this ground of appeal also.
Flick sentencing
[89] Mr Edwards argued that the Judge did not give him credit for his early guilty plea in relation to the Flick matter. He also argued that the Flick sentencing should have been concurrent with the sentences for the Worldwide matters, because the Flick offending was offending of a similar kind. Lastly, he argued that the cumulative effect of the Flick sentencing meant that the total sentence of 5½ years offended the totality principle set out in s85 Sentencing Act 2002.
[90] The Judge noted that the Flick offence occurred while Mr Edwards was on bail for the Worldwide offending. He noted that the Flick offence was conducted over a reasonably short period, and there was no indication of any loss having resulted. However, he said it called for a condemnatory sentence. Although he mentioned at the beginning of the sentencing notes that Mr Edwards had pleaded guilty to the Flick charge, he did not make specific mention of the guilty plea as a mitigating factor when considering the sentence for the Flick offending.
[91] We accept Mr Edwards’ submission that the Judge should have given a specific allowance for the guilty plea. However, the exercise which we must undertake is an exercise to determine whether the sentence which was imposed was manifestly excessive. In our view, having regard to the nature of the offence and the fact that it was committed while on bail for other more serious offending of the same nature, the Judge was entitled to see Mr Edwards’ offending in relation to the Flick matter as indicating contempt for the law. In our view the sentence of 6 months imprisonment was not manifestly excessive in the circumstances of the offending.
[92] Section 84 Sentencing Act gives guidelines on the use of cumulative and concurrent sentences. It specifies that concurrent sentences are generally appropriate if the offences for which the offender is being sentenced are of a similar kind, or are a connected series of offences. In this case the Judge determined that the Flick offending did not have sufficient connection to the Worldwide offending to justify concurrent sentences. Again, we are satisfied that that was an assessment which was open to the Judge on the facts of this case.
[93] We now turn to the totality principle. Mr Edwards submitted that the sentence of 5½ years imprisonment was out of proportion to the gravity of the overall offending in the Worldwide and Flick matters. We do not accept that proposition. While the sentence was at the upper end of the range available to the Judge, we do not believe that it could be characterised as manifestly excessive having regard to the totality of Mr Edwards’ offending.
[94] Mr Edwards’ appeal against sentence therefore fails.
Decision
[95] We dismiss Mr Edwards’ appeals against conviction and sentence.
Solicitors:
Crown Law Office, Wellington
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