R v Kendall HC Auckland CRI-2009-004-007655

[2011] NZHC 616

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2009-004-007655

THE QUEEN

v

GRAEME JOHN KENDALL

Counsel:         N F Flanagan for Crown

G C Gotlieb for Accused

Judgment:      1 March 2011 at 10:00 AM

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 1 March 2011 at 10:00 am

pursuant to R 11.5 of the High Court Rules.

Registrar / Deputy Registrar

Date……………………….

Solicitors:           Meredith Connell, P O Box 2213, Auckland 1140

Fax: [phone] – N Flanagan
Staffard Klaassen Solicitors, P O Box 29185, Auckland

Fax: [phone]

Counsel:             G Gotlieb / M Karam, P O Box 47369, Ponsonby, Auckland

Fax: [phone]

R V KENDALL HC AK CRI-2009-004-007655 1 March 2011

Introduction

[1]      Graeme John Kendall faces two charges of perjury pursuant to s 108 Crimes Act 1961.   The charges are based on affidavits sworn by him in opposition to an application to set aside a statutory demand.   The statutory demand was served by Feature Furniture Limited (FFL), which Mr Kendall controlled.  The alleged debtor was Home Pride Limited (HPL), which was controlled by Mr Kendall’s former wife, Ms Murfitt.  FFL asserted that HPL owed rent under a Deed of Lease between it and HPL.  HPL denied the existence of any lease.

[2]      The first affidavit was sworn on or about 23 February 2007 and filed in the High Court.  The Crown alleges that the affidavit contained assertions of fact known by the accused to be false and intended by him to mislead the High Court in the proceeding, namely:

(a)       Feature Properties Limited had leased a property at 2/658 Rosebank

Road to Feature Furniture Limited;

(b)      Feature Furniture Limited had sub-leased that property to Home Pride

Limited; and

(c)       Home Pride Limited occupied the property and was storing 2,000-

3,000 LPG cylinders there.

[3]      Count 2 relates to an affidavit sworn by the accused on or about 12 July 2007. The Court refused to accept this affidavit and the allegation relates only to the swearing of the affidavit.  The Crown alleges that the affidavit contained an assertion of fact known by the accused to be false and intended by him to mislead the Court in that proceeding, namely:

(a)       Feature  Furniture  Limited  had  sub-leased  the  property  at  2/658

Rosebank Road to Home Pride Limited; and

(b)      Home Pride Limited occupied that property and was storing 2,000-

3,000 LPG cylinders there.

[4]      The accused does not deny swearing the affidavits and, in relation to the first affidavit,  filing it  through  his  solicitor.    Nor  was there  any suggestion  that  the affidavits were intended to do other than influence this Court in its determination of HPL’s application to set aside the statutory demand.  The only issues, therefore, are whether any of the assertions were false and, if so, whether they were known by the accused to be false.

The companies

[5]      Mr Kendall has had a long and varied background in business.   For many years he owned a lamp and lampshade manufacturing business.  He has also owned a good deal of property over the years.   Although Mr Kendall has traded through different companies, for present purposes the only three I need to be concerned with are FFL, HPL and Feature Properties Limited (FPL).

[6]      FPL was incorporated in 1982 (Companies Office No. 115314) and changed its name to Feature Properties Limited on 3 October 2001.   It was and still is controlled by Mr Kendall who is the sole director and shareholder.   FPL is the registered proprietor of the property at 658 Rosebank Road, Avondale, which comprises three commercial units, of which Unit 2 was the subject of the statutory demand.

[7]      Feature Furniture Limited (Companies Office No. 110648) was incorporated in 1981.  It changed its name several times but I am only concerned with the period

1 April 2003-1 January 2007.   Between 1 April 2003 and 8 December 2003 the company was known as Kendall Properties Limited and between 9 December 2003 and 1 January 2007  it  was known as  Feature Furniture  Limited.   During these periods and until its removal from the Companies Office register in 2009 it was controlled by the accused.

[8]      HPL was incorporated in 1990 (Companies Office No. 478715) and changed its name to Home Pride Limited in January 1995, at which time it was controlled by Mr Kendall.  In 1999, HPL, through its accountant, obtained non-active status from the Inland Revenue Department, relieving it of the obligation to file income tax returns.  If the company began trading again it was required to advise the IRD.  At that stage Mr Kendall was still the sole director and shareholder.  In November 2005 control over HPL passed to Ms Murfitt who became the sole director of the company and acquired the shares. That remains the position now.

[9]      The  transfer  of  HPL from  Mr  Kendall’s  control  to  Ms  Murfitt’s  control followed a meeting between Mr Kendall, Ms Murfitt and Mr Kendall’s accountant, Mr Williams.  I heard evidence from all three.  According to Ms Murfitt she wished to purchase a property and agreed to use HPL as the vehicle because it had not traded for a long time and had no assets or liabilities.  Ms Murfitt said she was assured by Mr Williams that HPL was a “clean company” and that Mr Kendall did not disagree with that statement.  Mr Williams’ evidence was consistent with this account.  He said that they were to select one of the companies that had not traded, was relatively clean  and  could  be  re-activated  again  without  problems.    Both  said  they  were unaware of HPL being party to any lease.   Neither Ms Murfitt nor Mr Williams suggested that the transfer of the shares in HPL were to be anything other than permanent.

[10]     Mr Kendall had a different version of events.  He claimed that Ms Murfitt did know of the lease.  He also claimed that the company was to be owned between him and Ms Murfitt jointly and that he only agreed to transfer 100% of these shares to her on a temporary basis because that was what was required by the bank financing the purchase of the property she wanted to purchase.  This assertion by Mr Kendall in his examination-in-chief was never put to Ms Murfitt in cross-examination.  It is inconsistent  with  what  Mr  Williams  recalled  of  the  arrangement.    It  is  not  an essential aspect of the Crown case but I do not accept that the transfer of HPL’s shares to Ms Murfitt was anything other than on a permanent basis to provide her with a vehicle to purchase an investment property with.

The leases over 2/658 Rosebank Road

The alleged false statements

[11]     The statutory demand asserted a lease between FFL and HPL.  However, in her  affidavit  9  February  2007  in  support  of  HPL’s  application  to  set  aside  the statutory demand, Ms Murfitt produced a copy of a title search of 658 Rosebank Road which showed that the registered proprietor was FPL.  On the face of it, FFL had no standing to enter into a lease in respect of the property since it was not the registered proprietor and there was no evidence of its status as a lessee.

[12]     Mr Kendall responded in an affidavit 23 February 2007 in which he asserted:

(2)       Feature   Furniture   leases   premises   at   2/658   Rosebank   Road, Avondale, Auckland, (“the premises”) from the owner Feature Properties Limited (“Feature Properties”) pursuant to a deed of lease dated 1 February

2001, a copy of which is annexed hereto and marked “A”.

(3)       On 24 Jauary 2007 the Feature Furniture issued a statutory demand to the Applicant, Home Pride Limited (Home Pride) demanding payment of the sum of $64,400 being rent for the premises at   2/658 Rosebank Road, Avondale, Auckland for the period 1 April 2003 to 1 January 2007 a total of forty six months at $1,400 per month pursuant to a Deed of Lease dated 1

April 2003 between Feature Furniture Limited and Home Pride , a copy of

which is annexed hereto and marked “B”. Home Pride also owes rent from

01 January 2007 to the present.

[13]     It is these statements together with the repeated assertion as to the lease between FFL and HPL in Mr Kendall’s affidavit 12 July 2007 that form the basis of both charges.  The Crown case is that neither lease existed; Mr Flanagan submitted that Mr Kendall had asserted the lease between FFL and HPL without realising that FFL could not have granted a lease and was then forced to make up the  lease between FPL and FFL to provide the claim that the lease referred to in the statutory demand was actually a sub-lease between FFL and HPL.

The lease between FPL and FFL

[14]     The lease said to be between FPL and FFL was annexed as exhibit A to the

23 February 2007 affidavit.   However it identified the leased premises as 3/658

Rosebank Road, not 2/658.  This was brought to Mr Kendall’s notice in a subsequent

affidavit by Ms Murfitt but the correct lease was never produced.   In his affidavit

12 July 2007 Mr Kendall said that a substantial amount of documentation relating to the  affairs  of  FFL  and  company  affairs  were  in  the  possession  of  his  former solicitors, Price Baker Berridge which his current solicitors, Corban Revell, were trying to obtain.   He also claimed that Ms Murfitt had removed “all the company records”.  He said further (inconsistently with the previous statements) that he had handed the original leases to Corban Revell and they could be made available at the hearing of the application.  At trial, however, Mr Kendall claimed that he could not get the leases because he was now in a dispute with Corban Revell who would not release the documents.   Apart from his assertion there was no evidence of that dispute or that Corban Revell did have the lease.  Nor was there an explanation as to why, if the lease did exist, Corban Revell did not correct the error at the time the

12 July 2007 affidavit was filed.

[15]     In addition to the absence of the deed of lease between FPL and FFL there was evidence that in February 2001, when the lease was supposedly entered into, Unit 2 was already occupied by another tenant.  L and G Glogoski Limited occupied the  premises  pursuant  to  a  deed  of  assignment  of  lease  dated  15  May  2000. Mr Glogoski gave evidence that L & G Glogoski Limited had taken an assignment of the lease from the previous tenant when it purchased that tenant’s business.   The expiry date of the lease was 30 June 2002 and the company occupied the premises until that date.

[16]     Given the absence of the lease, the implausible explanations for its absence and the existence of another tenant at the time the lease was supposedly entered into, I am satisfied beyond reasonable doubt that there was no lease between FPL and FFL over 2/658 Rosebank Road.

The lease between FFL and HPL

[17]     Having found that there was no lease between FPL and FFL it follows that there could not have been a lease between FFL and HPL.  However, even ignoring the impossibility of FFL leasing premises that it had no interest in, I am satisfied

beyond reasonable doubt that the lease asserted by Mr Kendall between FFL and

HPL did not exist.

[18]     Mr Kendall annexed to his affidavit 23 February 2007 a deed of lease dated

1 April 2003 between Feature Furniture Limited and Home Pride Limited for 2/658

Rosebank Road, Avondale.  It was said to commence on 1 April 2003 and expire on

1 April 2013.   Ms Murfitt did not control HPL until 2005 and knew nothing of a lease between FFL and HPL.   She said that she had been given to understand by Mr Williams  and  Mr  Kendall  that  HPL was  “clean”  in  the  sense  of  having  no liabilities.  Mr Williams said he knew nothing about the lease.  There was, however, evidence from a number of witnesses about the use and occupancy of Unit 2 prior to

2005.

[19]     Mr Kendall gave evidence, which I accept, that in about 2000-2001 he saw someone in Nelson recycling gas cylinders, converting them into letterboxes, flowerpots and such like.   Mr Kendall thought that he might take up this idea for himself.  When the existing lease over Unit 2 expired and L & G Glogoski Limited moved out Mr Kendall decided to use those premises for the gas cylinder recycling business.  There was quite some work to do to bring Unit 2 up to a satisfactory state; the previous  tenant had  operated a paint-stripping business  there and  there was considerable damage to the fixtures and fittings from the chemicals used in that business.

[20]     I accept Mr Kendall’s evidence that he spent the rest of 2002 fitting out Unit 2 out for the purposes of the gas cylinder recycling business.   This included building extensive shelving to hold the gas cylinders.  I also accept that Mr Kendall acquired many gas cylinders and undertook work preparing them for recycling by removing any residual gas from them.

[21]     I also accept that Mr Kendall intended that, ultimately, HPL would operate the gas cylinder business.  Indeed, between August 2002 and January 2003 HPL paid rent of $1,400 to FPL, though that rent was not paid pursuant to any lease, a fact that Mr Kendall accepted.  The money used to pay this rent was simply transferred by Mr Kendall from his personal account into the HPL account and then on to the FPL

account until the accountant, Mr Williams, advised Mr Kendall to stop “paying himself” because it was creating an accounting nightmare.  From that point on there was never any rent paid by HPL which Mr Kendall explained as follows:

...that’s why Home Pride, while it was under my control, never paid any rent. From the 1st or the 3rd when the lease was created or the 1st of April when the lease was created we paid no rent and it was never intended to be any other way as I stated, that the company was 50/50...

[22]     However, Mr Kendall also said that HPL only traded for a few weeks at the end of 2002.  It did not trade in 2003.  It did not trade in 2004.  Nor did it trade in

2005, by which time there were (in addition to the gas cylinders) items being stored such as furniture, Mr Kendall’s boat and car.   Further, in October 2006 a security company, Icon Group, moved into Unit 2 to occupy the office area.

[23]     The state of the evidence was, therefore, that:

In the latter part of 2002 Mr Kendall was re-fitting Unit 2 and acquiring cylinders for HPL to use in the cylinder recycling business.  He intended that HPL would later occupy the premises for the purposes of that business but

there was no lease agreement at that point.

Apart from about four weeks in late 2002 HPL never actually traded in the gas cylinder recycling business.  Even then, it did not actually sell anything. There  was  no  evidence  of  ownership  of  the  gas  cylinders  acquired  by Mr Kendall being transferred to HPL.  I am unable to make a finding as to who owned the gas cylinders. Although the gas cylinders remained in Unit 2, the evidence is absolutely clear from Mr Kendall himself that the business

never got off the ground.

By 2005  Unit  2  was  substantially used  for storage,  not  only of  the  gas cylinders but also furniture (some of which was Ms Murfitt’s), Mr Kendall’s car and his boat. This use was unconnected with HPL.

In 2006 part of Unit 2 was let to Icon.  This would have been inconsistent with the terms of the lease asserted by Mr Kendall to have been granted to

HPL (which Mr Kendall no longer controlled).

Finally, in  an  affidavit  Mr Kendall swore on  12 May 2005  in unrelated proceedings he asserted that Unit 2 was used for storage and that neither

Unit 2 nor Unit 3 was “viably leasable”.

Mr Kendall never mentioned a lease to Ms Murfitt or Mr Williams at the meeting held to discuss Ms Murfitt taking over HPL to use as a vehicle for

pre-leasing a property.

[24]     Looking  at  this  evidence  as  a  whole  I  find  that  there  is  no  reasonable possibility that HPL entered into a lease with FFL on 1 April 2003.

The gas cylinders

[25]     The final particular in both counts relates to statements by Mr Kendall that HPL occupied the property and was storing 2,000-3,000 LPG cylinders there.  It is clear that a large number of gas cylinders were stored on the premises through the relevant period.  I am not able to reach a conclusion as to the number.  Mr Kendall asserted that there were 2,000-3,000 cylinders.  Mr Fale, who had worked for Icon, had noticed the cylinders and also estimated the figure to be 2,000-3,000.  However, the evidence of all the other witnesses was too vague to put a figure on.   The impression most had was that the cylinders would have numbered in the hundreds rather than thousands but they could not be sure.  It is possible that either there were

2000-3000 cylinders stored in Unit 2 or that Mr Kendall reasonably believed that there were.   The Crown has not proved a deliberate falsehood in relation to the number of cylinders stored there.

[26]     Given the Crown’s failure to prove the falsity of number of cylinders I find

this particular not proven.

Conclusion

[27]     It follows from my conclusions that the statements by Mr Kendall regarding the leases in each of his affidavits were false.  I also find that Mr Kendall knew when he swore those affidavits that neither lease existed.  Had he been mistaken he could easily have offered that as an explanation before now.  However, Mr Kendall was determined  throughout  his  evidence  to  assert  the  existence  of  both  leases  even though that was completely at odds with all of the other evidence about the use and occupation of Unit 2 over the relevant period.

[28]     Mr Gotlieb, on behalf of Kendall, sought to persuade me that Mr Kendall was just implusive and disorganised but did genuinely intend to get into the gas cylinder recycling business.  I accept that.  But it is also clear that Mr Kendall knew very well that neither of the leases existed.

[29]     The Crown offered a suggested motive for Mr Kendall’s falsehoods, namely that he was seeking to put pressure on Ms Murfitt following the acrimonious break- up of their relationship.  However, it is unnecessary for me to form any view about Mr Kendall’s motive.

[30]     I am required to be satisfied beyond reasonable doubt that the statements Mr Kendall made about the leases were false and that he knew they were false.  I am so satisfied.  The fact that the statements were made in affidavits, one of which was actually used in proceedings and the other sworn for the purpose of using in a proceeding  means  that  Mr  Kendall  made  the  statements  for  the  purpose  of misleading this  Court.    I therefore find  the charges  proved  on  the basis  of the

statements about the leases.

P Courtney J