R v Harris

[2023] NZHC 2634

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2019-004-11829

[2023] NZHC 2634

THE KING

v

PETER ALAN HARRIS CARDEN JAMES MULHOLLAND

Hearing:

17-18 April; 20-21 April; 24 April; 26-28 April; 1-2 May; 4-5

May; 8-9 May; 12 May; 15-17 May; 22 May; 24-26 May; 29-30
May; 2 June; 6 June 2023

Appearances:

B Dickey, D Luo and K Parkash for the Crown

R Reed KC, D Salmon KC, J Cundy and T Hu for Mr Harris
D Jones KC, C Morris, S Cameron and B Shen for Mr Mulholland

Judgment:

21 September 2023

VERDICTS OF ROBINSON J

Solicitors: Meredith Connell, Auckland; LeeSalmonLong, Auckland; Cook Morris Quinn, Auckland

Counsel: D Jones KC, Auckland; R Reed KC, Auckland; D Salmon KC, Auckland; T Hu, Auckland

R v HARRIS [2023] NZHC 2634 [21 September 2023]

[1]The purpose of this hearing is to deliver my verdicts in open court.

Background

[2]        Messrs Peter Alan Harris and Carden James Mulholland face charges under the Crimes Act 1961. The charges arise out of aspects of their involvement in the affairs of CBL Insurance Limited (which I will refer to as CBL).

[3]        Mr Harris faces all eight charges – charges 1 to 8. Mr Mulholland faces three of the eight charges – charges 2, 7 and 8. In charge 2, Mr Mulholland is charged as a secondary party to Mr Harris’ principal offending. In charges 7 and 8, Mr Mulholland is charged as Mr Harris’ co-defendant.

[4]        The charges fit into two categories. Charges 1 to 5 relate to alleged breaches of directions the Reserve Bank of New Zealand (RBNZ) made to CBL under s 143 of the Insurance (Prudential Supervision) Act 2010 between 25 July 2017 and 12 February 2018. I refer to these as the RBNZ Directions charges. Charges 6 to 8 relate to a deposit of €12.5 million (€12.5m) that CBL placed with the National Bank of Samoa (NBoS) on 15 October 2014. I refer to these as the NBoS charges.

The charges

[5]        The RBNZ Directions charges, in chronological order from when they are alleged to have occurred, are as follows.

(a)In charge 5, the Crown allege that on 13 October 2017 Mr Harris committed theft by person in special relationship, by executing an agreement on behalf of CBL with TexCaz Transborder Insurance Intermediaries (TexCaz) and United Specialty Insurance Company (United Specialty). The Crown allege this was contrary to the RBNZ’s requirement that CBL first obtain written permission from the RBNZ, as required by a direction the RBNZ had issued on 25 July 2017.

(b)In charge 4, the Crown allege that on 8 December 2017 Mr Harris committed theft by person in special relationship by executing a further

agreement on behalf of CBL with United Specialty and TexCaz. The Crown allege this was contrary to the RBNZ’s requirement that CBL first obtain written permission from the RBNZ, as required by the direction the RBNZ had issued on 25 July 2017.

(c)In charge 3, the Crown allege that on 18 January 2018 Mr Harris committed theft by person in special relationship by authorising a payment of collateral from CBL to United Specialty in the amount of USD 4,824,798. The Crown allege this was contrary to RBNZ’s requirement that CBL consult the RBNZ before entering into certain transactions, as required by a direction issued by the RBNZ on 22 November 2017.

(d)In charge 2, the Crown allege that on 14 and 15 February 2018, Mr Harris, assisted by Mr Mulholland, committed theft by person in special relationship by authorising payments of collateral to United Specialty in the total amount of USD 9,760,053. The Crown allege this was also contrary to the RBNZ’s requirement that CBL consult the RBNZ before entering into certain transactions, as required by the direction issued by the RBNZ on 22 November 2017 and modified by further direction on 29 January 2018.

(e)In charge 1, the Crown allege that on 16 February 2018 Mr Harris committed theft by person in special relationship by authorising a payment of €25 million (NZD 42,136,416) from CBL to Alpha Insurance A/S (Alpha). The Crown allege this was contrary to the RBNZ’s requirement that CBL not make that payment, as required by a direction issued by the RBNZ on 12 February 2018.

[6]        The NBoS charges, in chronological order from when they are alleged to have occurred, are as follows.

(a)In charge 6, the Crown allege that between 9 May 2014 and 22 October 2014 Mr Harris obtained by deception a payment of €12.5m for the

benefit of Alpha from or through NBoS. The Crown allege that this was in substance a loan by CBL to Alpha, but that Mr Harris obscured this by using a fraudulent stratagem to make it appear that the lender was Federal Pacific Group (Singapore) Pte Limited (FPGS).

(b)In charge 7, the Crown allege that Mr Harris and Mr Mulholland obtained by deception, for the benefit of CBL, a lower risk charge for the NBoS deposit for the purposes of CBL’s insurance solvency calculations; and that they did so by omitting to disclose that the deposit, together with a surety bond, was collateral for a loan from NBoS to FPGS.

(c)In charge 8, the Crown allege that Mr Harris and Mr Mulholland, engaged in false accounting by omitting to disclose in the CBL Group Annual Report for the year ended 31 December 2014 that the €12.5m deposit with NBoS was, together with a surety bond, collateral for a loan from NBoS to FPGS.

[7]The trial proceeded as a Judge-alone trial, and I reserved my decision.

[8]        I am required to give reasons for my verdicts.1 Rather than reading these at length, the full reasons for my verdicts will be released after this hearing today.

Verdicts

[9]Mr Harris and Mr Mulholland would you please stand.

[10]I return the following verdicts:

1      R v Harris [2023] NZHC 2635.

Charge	Description	Verdict
Charge 1	Theft    by    person    in     special relationship
Mr Harris	Not guilty
Charge 2	Theft    by    person    in     special relationship
Mr Harris	Not guilty
Mr Mulholland	Not guilty
Charge 3	Theft    by    person    in     special relationship
Mr Harris	Not guilty
Charge 4	Theft    by    person    in     special relationship
Mr Harris	Not guilty
Charge 5	Theft    by    person    in     special relationship
Mr Harris	Not guilty
Charge 6	Obtaining by deception
Mr Harris	Not guilty
Charge 7	Obtaining by deception

Mr Harris	Not guilty
Mr Mulholland	Not guilty
Charge 8	False accounting
Mr Harris	Not guilty
Mr Mulholland	Not guilty

Summary

[11]      Mr Harris, I have found you not guilty on all charges. In accordance with my verdicts, you are discharged on the charges and are now free to go.

[12]      Mr Mulholland, I have found you not guilty on charges 2, 7 and 8. In accordance with my verdicts, you are discharged on the charges and are now free to go.

Robinson J