R v Middeldorp
[2015] NZHC 951
•7 May 2015
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CRI 2013-085-10823
CRI 2013-085-10822 [2015] NZHC 951
THE QUEEN
v
JOHANNES HENDRIK MIDDELDORP NOELENE KAY BANTON
Hearing: 18 February 2015 - 1 April 2015 Appearances:
G J Burston, P W Gardyne and M J Ferrier for the Crown
J Bioletti for Mr Middeldorp
B Hunt and A M Courtney for Ms BantonJudgment:
7 May 2015
JUDGMENT OF MALLON J (Reasons for Verdict)
Introduction ....................................................................................................................................... [1] Background........................................................................................................................................ [5]
Evidence admissibility issues .......................................................................................................... [10] The 22 August 2012 search........................................................................................................... [10] Video interviews ........................................................................................................................... [11] Propensity..................................................................................................................................... [14] Co-conspirators ............................................................................................................................ [15]
Alleged modus operandi ................................................................................................................. [16]
The charges ...................................................................................................................................... [19] The particulars ............................................................................................................................. [25] The parties .................................................................................................................................... [27] Reproducing documents with intent to cause loss: the elements .................................................. [31] Making a “document” .................................................................................................................. [35]
Reproduction ................................................................................................................................ [40]
R v MIDDELDORP and BANTON [2015] NZHC 951 [7 May 2015]
Intention to cause loss to any other person .................................................................................. [68]
The alternative charge .................................................................................................................... [70]
Dishonestly using documents ....................................................................................................... [70]
Evidence of modus operandi .......................................................................................................... [74] The publications and the particulars ............................................................................................ [74] The steps involved ........................................................................................................................ [76] Leads ............................................................................................................................................ [85] Publication titles........................................................................................................................... [94] Contact details and aliases........................................................................................................... [97] Other sales techniques: prior contact/at the printers/free colour ................................................ [98] Representations as to distribution .............................................................................................. [106]
Evidence of printing and distribution ..........................................................................................[114] Evidence of printing ....................................................................................................................[114] Defendants not in a position to print more ................................................................................. [127] Conclusion on numbers printed.................................................................................................. [134] Intention to print more?.............................................................................................................. [135]
Are the charges proven? ............................................................................................................... [148] Roadcare NZ: charge 29A .......................................................................................................... [148] Roadcare NZ: alternative charge 29 .......................................................................................... [170] Handbrake: charge 28A ............................................................................................................. [171] Handbrake: alternative charge 28.............................................................................................. [182] The Local Wall Calendar: charge 32A ....................................................................................... [183] The Local Wall Calendar: alternative charge 32 ....................................................................... [190] Children in the Community: charge 25A .................................................................................... [191] Children in the Community: alternative charge 25 .................................................................... [214] The Local Business Guide: charge 31A..................................................................................... [215] The Local Business Guide: alternative charge 31 ...................................................................... [235] Your Local Business Book: charge 34A ...................................................................................... [236] Your Local Business Book: alternate charge 34 ......................................................................... [245] Community Guide: charge 26A ................................................................................................. [246] Community Guide: alternate charge 26 ..................................................................................... [268] Find a Business: charge 27A ...................................................................................................... [269] Find a Business: alternate charge 27 ........................................................................................ [295] The NZ Fire Fighter: charge 33A ............................................................................................... [296] The NZ Fire Fighter: alternate charge 33 .................................................................................. [303]
Verdicts........................................................................................................................................... [304]
Introduction
[1] The defendants, Johannes Middeldorp and Noelene Banton, were tried in a Judge alone trial before me on nine charges of reproducing a document with intent to obtain a pecuniary advantage,1 and nine alternative charges of dishonestly using a document.2 At the conclusion of the trial I reserved my decision on the verdicts. Today I delivered my verdicts as set out at the end of these reasons and at the same
time have made available this judgment which sets out the reasons for the verdicts.
[2] The charges arise out of advertising which the defendants endeavoured to sell, and in many cases did sell, to mainly small and medium-sized businesses across New Zealand. Each charge relates to a different named publication (comprising community magazines, a calendar, and business directories) in which it was represented that the advertisement would be placed. The Crown alleges that these publications were not genuine. It alleges that they were not printed and distributed in any meaningful way, and that there was never any intention that they would be.
[3] The alleged offending is said to have occurred between March 2011 to October 2012. The alleged scheme involved using “fax proofs”. The Crown says that there were 951 individual fax proofs sent by the defendants to their victims during this period. These were used to seek payments that amounted to approximately $480,000. Not all the businesses from which they sought payment agreed to pay, or there is no proof that they did. The Crown says that the defendants received payments totalling approximately $116,000 which it has been able to trace back directly to specific fax proofs.
[4] The defence for Mr Middeldorp was that printing and distribution of the publications was to occur when all the advertising for that publication had been sold. As it transpired, Mr Middeldorp was not in a position to print the publications on any significant scale. However, at the time the advertising was being sold, it was intended that the publications would be printed. The defence for Ms Banton was that she was just doing some of the sales for Mr Middeldorp. She did not intend that
there would be no printing or distribution of the publications and did not know that
1 Crimes Act 1961, s 258.
2 Section 228.
this was the way Mr Middeldorp was running the business (if it is found that it was). The defence for both defendants also raised a number of legal and technical matters about proof of the charges.
Background
[5] The charges in the indictment originally included 24 charges in relation to Anthony Hendon and James Burns. They were alleged to be carrying out a similar operation to that in which it is alleged that Mr Middeldorp and Ms Banton were engaged.3 All four of them had previously worked together in an advertising business in Auckland some years earlier. During the period covered by the charges they were operating separate businesses: Mr Hendon and Mr Burns worked together from Mr Hendon’s home in Picton; and Mr Middeldorp and Ms Banton worked from their home in Port Waikato. Mr Hendon and Mr Burns pleaded guilty prior to trial.4
Mr Burns has been sentenced.5 Mr Hendon is awaiting sentencing.6
[6] The charges arose out of an investigation that followed a story which aired on the Campbell Live programme on TV3 (a long-standing programme which airs at 7 pm on week nights which at this time had approximately 300,000 viewers nationwide across all demographics). Mr Clayton is a reporter with that show. He prepared a story which ran on the Campbell Live programme on 6 March 2012. This was about a person named “Dan” who had been selling advertising but it was allegedly a scam business. Following viewer feedback and further investigation a further story aired on 21 March 2012. This show focussed on Mr Hendon. Mr Clayton took a camera crew to Picton and arrived at Mr Hendon’s door. Mr Hendon declined to be interviewed. A third story aired on 22 March 2012 which focussed on interviews with people who believed they had been the victims of scam advertising
operations.7
3 Although the businesses were conducted separately, there is evidence of a substantial amount of interaction between the four individuals. For example, strategies and earnings were discussed.
4 Mr Burns pleaded guilty on 24 July 2014. Mr Hendon pleaded guilty on 10 February 2015.
5 See R v Burns [2014] NZHC 2278, where Mr Burns was sentenced by Collins J to seven months home detention.
6 He is to be sentenced on 8 May 2015.
7 Ms Hunt objected to this evidence. The evidence I have referred to is all relevant background evidence. It is relevant when assessing some of the intercepted telephone conversations. It is also relevant when considering the time at which a quote was sought for a substantial print run of one of the publications.
[7] Following these shows, communications took place between the Serious Fraud Office (SFO), the Organized and Financial Crime Agency of New Zealand (OFCANZ) and the Commerce Commission. A joint investigation was commenced. As part of that investigation surveillance took place pursuant to interception warrants. Initially this focussed on Mr Hendon. This surveillance captured some conversations between Mr Hendon and the defendants. The defendants came under direct surveillance during the period between 2 August 2012 and 27 August 2012.
[8] As a result of information during that surveillance a search took place of the defendants’ home at Port Waikato on 22 August 2012. Two search warrants were obtained and executed at the time. One of these search warrants was for the covert search of electronic records. The Crown does not rely on any evidence from that
search and I have not relied on any evidence from that search in these reasons.8 A
second search was carried out on 24 October 2012. At that time clones were taken of the electronic records. These electronic records included the 951 fax proofs that form the charges.
[9] The defendants were arrested on 24 October 2012 when the search warrant was executed. They each gave video interviews.
Evidence admissibility issues
The 22 August 2012 search
[10] The covert search executed on 22 August 2012 was challenged. I am satisfied that, even if there were concerns about the 22 August 2012 search, it did not taint the 24 October 2012 search so as to render evidence obtained from that search inadmissible. I am also satisfied that evidence obtained during the 22 August 2012 search was not directly or indirectly used at the trial to the prejudice of either defendant. My reasons will be set out briefly in a separate judgment to be issued
shortly.
8 The exception is a photograph of the office taken at the time of the 22 August 2012 search which Mr Middeldorp relies on as evidence that a computer hard drive was present then but not at the time of 24 October 2012. Notwithstanding the challenge to the search, this photograph was admitted by consent.
Video interviews
[11] The video interviews with each defendant were very long.9 They took place in what appeared to be typical interview rooms (small, confined interviewing rooms with no windows and the door closed). The defendants were given minimal breaks and almost no refreshments during their interviews.10 Part-way through Ms Banton’s interview a Serious Fraud Officer joined the interview. He was not introduced to Ms Banton even though he remained in the interview room and fully participated in questioning her from that point. In breach of the Chief Justice’s Practice Note on Police Questioning,11 the defendants were repeatedly cross examined. The defendants were advised of their rights at the outset of their interviews but at no other time during the lengthy interviews were they reminded of their rights and asked if they wished to continue.
[12] In the course of the trial I raised my concerns about the interviews. Each defendant was given the opportunity to seek a ruling from me that all or some of the interviews should be ruled inadmissible. Both defendants confirmed that they did not seek to have their interviews ruled inadmissible.12 However they did seek that I take into account my concerns when assessing what they said in their interviews.
[13] Mr Middeldorp and Ms Banton are intelligent and have life skills and experience that many who are subject to questioning from law enforcement agencies
9 The interview of Mr Middeldorp lasted almost 14 hours and the interview of Ms Banton lasted over seven hours.
10 Mr Middeldorp’s interview began at 11.20 am on 24 October 2012 and finished at 1.03 am on
25 October 2012. He was given only two breaks, the first from 2.41 pm to 3.11 pm, and the second from 9.30 pm to 10.26 pm during which he was provided with food. The interviewing officer noted that it was “one of the longest interviews” he had ever done. Mr Middeldorp became visibly tired as the interview progressed. At 5.44 pm, after six hours of the interview, his leg began to cramp. By 7 pm, he still had not had another break, and only received a brief one at 7.50 pm when he asked to use the bathroom. At 8.46 pm, his leg began to cramp again.
When the interview resumed after the second break, Mr Middeldorp was yawning and looked
visibly tired and uncomfortable. Ms Banton’s interview began at 11.01 am on 24 October 2012 and finished at 5.37 pm that same day. She was given only one break, from 4.56 pm to 5.09 pm, and was not provided with any lunch. She commented that she had not had breakfast and at
3.21 pm asked if she could have something to eat. She was given a cup of tea at the beginning of the interview and at 12.58 pm, and was given a drink and something like a muesli bar to eat at
5.09 pm.
11 Practice Note – Police Questioning (s 30(6) of the Evidence Act 2006) [2007] 3 NZLR 297 at
298.
12 Ms Banton’s position on this matter changed back and forth at various points. In the end she did not seek that ruling. The transcript of the in-chambers discussions contains the details of this.
do not possess. Although they appeared to withstand the sustained questioning well, it would be very difficult for any person to think clearly throughout such a lengthy interview in a confined space and without adequate breaks or refreshments. The approach I have adopted to the interviews is to consider answers they gave in the early stages of the interview, and in the later stages of the interviews I have only
taken into account any potentially exculpatory statements.13
Propensity
[14] The charges concern conduct over time that the Crown contends involved the same modus operandi throughout. Proof of one charge potentially provides support for another charge. I have, however, been careful to consider whether each charge is proven on the evidence that relates to it, including whether the modus operandi established in respect of another charge legitimately provides support for whether that modus operandi is established in respect of the particular charge.
Co-conspirators
[15] The Crown submits that Mr Middeldorp and Ms Banton were engaged in a joint criminal enterprise, essentially a bogus publishing business, operating from their Port Waikato home. Notwithstanding Ms Banton’s claims in her video interview that she was only involved in the sales, there was reasonable evidence from the statements she made to others (for example, to Mr Hendon, Ms Dow and to her daughter) that there was a joint enterprise and that she was engaged in the operation beyond the sales. Likewise in respect of Mr Middeldorp. As such, statements made by one defendant to advance or further the enterprise are admissible against the other.
Alleged modus operandi
[16] The Crown case is that the same general modus operandi was used in respect of each charge:
13 I was invited by the Crown to rely on lies or misleading answers that the Crown submits they gave, but I have not done so. To the extent that they purported to give exculpatory explanations, I concluded that they did not assist them.
(a) First, a title for a publication was chosen.14
(b)Secondly, the defendants identified potential businesses that would be targeted for advertising in the identified publication.15
(c) Thirdly, a sales call by either Ms Banton or Mr Middeldorp was made, during which the caller claimed to be calling from the particular publication chosen, to finalise approval of an advertisement for that publication (at which time the opportunity was taken to obtain further
contact details if necessary).16
(d) Fourthly, if the business did not decline to proceed further during the
sales call, it was sent a “fax proof”.17
(e) Fifthly, if the business signed the authorisation or sent a return email approving the advertising, then the defendants sent an invoice to the business. Some businesses paid some or all of the invoices they were sent. Others did not.18
[17] The Crown alleges that this modus operandi involved a number of misleading sales techniques. For example:
14 This was either a business directory-type publication or a publication promoting an altruistic or community-based cause.
15 Some businesses were selected from a database on a computer server at the defendants’ home
which had details of businesses from which they had previously sought and/or obtained payment for advertising in relation to other publications. Other businesses were identified by advertisements they had placed in other publications (for example, community magazines or the Yellow Pages). The target businesses were sometimes referred to as “leads” and there was evidence that “leads” were sometimes obtained on “leads runs”.
16 In some instances there was no prior sales call before a fax proof was emailed.
17 “Fax proof” is a misnomer. The documents in question were almost invariably sent by email.
The fax proof was a template comprising a header with the name of the publication, the defendants’ contact information, and a copy of the advertisement. The advertisement would be one which the defendants had either used before for that business, or which they reproduced from the publication through which the business was identified, or would occasionally be one which the defendants put together from other sources. The fax proof also included terms and conditions, a quote for the price of the advertisement, and a space for the business to sign to indicate authorisation.
18 The Crown case is that the offence is complete before the invoice is sent: that is, the actus reus of the charge and the alternative charge is complete and the defendants have acted with the necessary intent.
(a) The advertisement sent to the business for approval was usually not one that the defendants had obtained directly from the business for the purposes of the publication for which approval was sought. Rather it was usually a scanned image from another publication in which the business had previously agreed to advertise, which the defendants had obtained in various ways, including by way of a “leads run”.
(b)The person making the call used an alias and provided contact details which differed for each publication.
(c) The person receiving the sales call was told that their business had advertised in past editions of the publication in question, or that they had previously agreed to advertise in the coming edition, or both, and the call was simply a formality to confirm the arrangement.
(d)The person was told that the publication was “just about to go to print”, to create a sense of urgency, or told that the caller was just checking that none of the business’s details had changed, and/or told that the publication or advertisement was being upgraded to colour at no extra cost to create a sense of bargain.
(e) Some of the titles were chosen by the defendants to create the impression that the publications were associated with or promoted an altruistic or community-based cause. This impression could then be used to sell the advertisement, for example, by claiming that the
magazine was intended to provide support to “kids in schools”.19
(f) Some of the titles, as well as other information on a fax proof, indicated that it was community-based. This gave the business to whom the fax proof was sent the impression that the publication
would contain local businesses and would be distributed locally.20
19 Examples were Children in the Community, Handbrake, Roadcare NZ and The NZ Fire Fighter.
20 Examples were Children in the Community, Community Guide, The Local Business Guide, and
Your Local Business Book.
(g)Sometimes during the sales call, the caller would make general statements about where the publication was to be distributed, for example “the magazine we’ve got going through the region this month” or that the magazine would going to “schools, doctors’ surgeries, PO boxes”.
(h)Sometimes, and less commonly, during the sales call, the caller would make more specific statements about where the publication was being distributed and in what numbers, for example a “circulation [of]
3000”, “estimated print run 1500”.
[18] The Crown says that these techniques were part of the deception that the defendants were selling advertising in a legitimate publication. The Crown contends that the publications were in fact bogus. As already noted, the Crown contends that the defendants did not intend to and did not print or distribute the publications in any meaningful way. To the extent that there was any printing done at all, the Crown says that it was done in small numbers and usually with the purpose of securing payment on an unpaid invoice when businesses sought proof that the advertising was legitimate.
The charges
[19] The indictment contains two kinds of charges laid in the alternative:
(a) Nine charges of reproducing documents with intent to cause loss, laid under s 258 of the Crimes Act 1961 (counts 25A to 29A and 31A to
34A).
(b)Nine alternative charges of using documents with intent to obtain a pecuniary advantage, which are laid under s 228 of the Crimes Act
1961 (counts 25 to 29 and 31 to 34).
[20] The Crown principally seeks verdicts on the s 258 (reproduction) charges. If I was to find that those charges were not made out on the evidence for whatever reason, the Crown then asks for verdicts to be returned on the s 228 (using a
document) charges. Each charge is laid against Mr Middeldorp and Ms Banton as parties under s 66(1).
[21] Both sets of charges have been grouped by the title of the publication to which the fax proofs relate. There are, therefore, nine publications corresponding to the nine reproduction charges and the nine alternative charges of using a document. Each charge alleges that the fax proofs are the documents that amount to or contain the reproduced document (or are the documents which were “used”) with the necessary intent. Particulars are then set out. The particulars include a reference to a schedule. The schedule then lists out, alphabetically by reference to the victims’ names, the individual fax proofs relied upon in respect of each charge.
[22] By way of example, count 25A is as follows:
… Johannes Hendrik Maria Middeldorp and Noelene Kay Banton between 17 July 2011 and 11 August 2012 at Wellington or elsewhere in New Zealand, with intent to cause loss to other persons, did make documents that were, in part, a reproduction of other documents, namely “fax proof” documents that were in part reproductions of other documents.
Particulars: Purported magazine entitled “Children in the Community”
1. The accused helped, encouraged, made, or caused to be made, “fax proof” documents purporting to be an offer for inclusion of an advertisement in a legitimate magazine publication with intent to cause loss to any other person;
2. A fax proof is a document that in part reproduces another document;
3. A fax proof is made with intent to cause loss to any person;
4. A fax proof purports to be associated with a legitimate magazine publication;
5. The details surrounding the publication and circulation of the magazine are false;
6. Fax proofs may form part of a contract with a person obtained by deception for advertising services and publication in the fraudulent magazine;
7. Fax proofs were made in connection with the promotion of the fraudulent publication of the magazine entitled Children in the Community; and
8. The schedule annexed to the indictment marked 25 records the details of the fax proof documents which are reproductions.
[23] The relevant schedule then identifies that it relates to Children in the Community; states that the total approximate value is $68,036 (plus GST); and itemises 158 individual fax proofs that are relied on. By way of example, the first and last itemised fax proof are described as follows:
1. A fax proof addressed to A1 Demolition in the sum of $495.00 (plus
GST) dated 18 July 2011 (SFO# 30341).21
…
158. A fax proof addressed to Youthtown in the sum of $450.00 (plus
GST) dated 27 July 2011 (SFO# 30733).
[24] Each charge is framed in this way. The nine charges vary only in relation to their date range, the publication to which they relate, the total amount requested by the fax proofs for that publication, and the identified fax proofs set out in the schedule. The table below lists the individual publication titles used, and the total
amount sought from victims over the period covered by the charges:22
Magazine name
Total amounts requested
(including GST)
Children in the Community
$ 78,241.40
Community Guide
$ 97,359.00
Find a Business
$ 97,733.10
Handbrake
$ 1,535.25
Roadcare NZ
$ 38,766.50
The Local Business Guide
$ 154,238.00
The Local Wall Calendar
$ 3,731.75
The NZ Fire Fighter
$ 276.00
Your Local Business Book
$ 6,008.75
Total
$ 477,889.75
21 The “SFO#” is a number identifying the document, and through which the document could be retrieved and viewed through TrialDirector (the SFO document management system used in the trial).
22 Kirsten Haylock, an SFO employee, carried out the work to identify these amounts from the fax proofs. Her evidence was unchallenged.
The particulars
[25] The fax proofs provide the foundation for each count. Proof that the elements of the offence are established in respect of any one fax proof would prove that charge. In its opening address, the Crown described the charges as being “representative” charges. Prior to the enactment of the Criminal Procedure Act
2011,23 the Crimes Act did not define that term. The Crimes Act provided that
“[e]very count shall in general apply only to a single transaction.”24 However the established practice, endorsed by the courts, was to charge as a representative count a pattern of similar offending that was alleged to have occurred frequently, which the complainant was unable to distinguish in terms of dates and details (as, for example, with sexual offending that may have occurred over a number of years).25 The charges in the present case are not representative in that sense.
[26] Prior to the Criminal Procedure Act it was also considered appropriate and not unusual to charge as a single count a continuing course of conduct which it would be artificial to charge as separate offences.26 It is presumably this approach that was considered appropriate in the present case, even though each fax proof could be identified and could itself establish the charge. No objection was taken to the form of charging that was adopted. It was a convenient way to provide the
defendants with the details of what was being alleged while avoiding an unnecessary multiplicity of charges (up to 951 charges). No prejudice was claimed and I have not identified any prejudice in the way the charges were framed.27
The parties
[27] Mr Middeldorp and Ms Banton are charged under s 66(1), as either making or causing to be made the fax proof documents, or helping or encouraging each other to do so. As each fax proof is the basis for a charge, the charge will be proven in
respect of each particular against both defendants if one or the other of the
23 The charges were brought prior to the entry into force of the Criminal Procedure Act 2011.
24 Crimes Act 1961, s 329(6) (now repealed).
25 R v Qui [2007] NZSC 51, [2008] 1 NZLR 1 at [8], referring to R v Accused (CA 160/92) [1993] 1
NZLR 385 (CA).
26 At [8].
27 If the charges were subject to the Criminal Procedure Act 2011, they would be representative charges pursuant to s 20(2) of that Act.
defendants made or caused to be made the document, and the other intentionally helped or encouraged that defendant to do so.
[28] Counsel for Mr Middeldorp submits that for a defendant to have helped or encouraged the other in relation to any particular fax proof sent by the other, it is necessary to prove that the defendant knew that the fax proof was being sent, and that they shared the relevant intent at that time. He submits that if the Crown can prove only independent acts by one defendant in relation to each fax proof then the charge cannot be made out. He submits that as far as the evidence shows, each defendant forwarded the fax proof to any particular target they had identified from their own laptop. He notes that they were not charged as parties acting with a common purpose under s 66(2).
[29] However, as is discussed in Ahsin v R, there can be an overlap in s 66(1) and s 66(2) liability.28 Liability under the latter may arise where the crime actually committed was not the common purpose but was a foreseeable probable consequence. It may also be more suitable to cases where there is uncertainty as to the precise common purpose.29 That is not to say that where parties are acting with a common purpose there cannot be liability under s 66(1). What is required is help or encouragement to the party committing the offence, with an intention to help or encourage the party committing the offence, and knowledge of the essential facts that comprised the elements of the offence to be committed. That help or encouragement may be through acts which are not part of the actus reus of the offence.30
[30] In this case the Crown alleges that the parties worked together to sell advertising using a common modus operandi (including a shared computer-based system) in relation to a particular chosen publication over a period of time. While one party may have committed the actus reus of the offence in relation to any
separate particular that makes up the offence, the other may be liable as a party in
28 Ahsin v R [2014] NZSC 153.
29 At [237] to [240] per William Young J.
30 For example, party liability can arise from driving a car to a robbery although the driver does not participate in the actual robbery. Where the parties each carry out part of the actus reus they are joint principal parties under s 66(1)(a) as, for example, a robbery where A threatens violence while B steals the property.
relation to that particular if they helped or encouraged that party in that particular instance through their mutual operation.31 That said, the Crown case did not identify any particular aspects of the mutual enterprise that would give rise to liability by one defendant in respect of a particular fax proof by the other.32 Nor did the Crown identify in relation to some of the charges what evidence it relied on to prove the charge against one defendant where the relevant fax proofs for that charge were sent only by the other defendant. In these circumstances I have approached proof of the charges by reference to what the defendant is proved to have done in respect of that particular. Proof of any particular against a defendant will prove the charge against that defendant.
Reproducing documents with intent to cause loss: the elements
[31] Section 258(1) provides as follows:33
258Altering, concealing, destroying, or reproducing documents with intent to deceive
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to cause loss to any other person,—
(a) alters, conceals, or destroys any document, or causes any document to be altered, concealed, or destroyed; or
(b) makes a document or causes a document to be made that is, in whole or in part, a reproduction of any other document.
(2) An offence under subsection (1) is complete as soon as the alteration or document is made with the intent referred to in that subsection, although the offender may not have intended that any particular person should—
(a) use or act upon the document altered or made; or
31 Compare with Ngamu v R [2010] NZCA 256, [2010] 3 NZLR 547, a case involving a number of accused and multiple instances of dishonestly using a document (a cheque) with intent to obtain a pecuniary advantage. The accused were charged as parties in respect of each document under s 66(1)(a) only. This meant that it had to be proven that each accused did an act in relation to each charge that was part of the actus reus of the offence. The Court of Appeal held that the trial Judge erred in directing that liability was established in respect of an accused if that accused was part of a joint enterprise. and where a cheque was dishonestly used by any of the accused with intent to obtain a pecuniary advantage in furtherance of that joint enterprise.
32 For example, whether it was enough that they were selling fax proofs in respect of the same publication at the same time.
33 Emphasis added.
(b) act on the basis of the absence of the document concealed or destroyed; or
(c) be induced to do or refrain from doing anything.
[32] The italicised words are those that relate to the charges here. For principal liability the Crown must therefore prove:
(a) the defendant made (or caused to be made) a document which is, in whole or in part, a reproduction of another document; and
(b)in making the reproduction the defendant intended to cause loss to any other person.
[33] For liability as a person who helped or encouraged the other the Crown must prove that:
(a) the defendant did something to help or encourage the other defendant to make the document that is in whole or in part a reproduction of another document;
(b)the defendant intended that their action would help or encourage the other defendant to make that document; and
(c) the defendant knew that the other defendant was making a document which was a reproduction of another document with intent to cause loss.
[34] I will consider whether the general modus operandi (involving creating the fax proof template with the advertisement and forwarding it to the targeted businesses) would meet the actus reus of the offence before turning to whether the particulars of each charge are proven.
Making a “document”
[35] “Document” is defined broadly for the purposes of s 258 (and other provisions in Part 10 of the Crimes Act).34 Unless the context requires otherwise it means a “document, or part of a document, in any form”, and includes “without limitation”:
(a) any paper or other material used for writing or printing that is marked with matter capable of being read; or
(b) any photograph, or any photographic negative, plate, slide, film, or microfilm, or any photostatic negative; or
(c) any disc, tape, wire, sound track, card, or other material or device in or on which information, sounds, or other data are recorded, stored (whether temporarily or permanently), or embodied so as to be capable, with or without the aid of some other equipment, of being reproduced; or
(d) any material by means of which information is supplied, whether directly or by means of any equipment, to any device used for recording or storing or processing information; or
(e) any material derived, whether directly or by means of any equipment, from information recorded or stored or processed by any device used for recording or storing or processing information.
[36] It can be seen that a document includes anything (such as paper, film, a disc, a device, or other material) which records, stores or supplies information. Something is a document because it has “a material record of information”. As the Court of Appeal said in R v Misic:35
[31] … Essentially, a document is a thing which provides evidence or information or serves as a record. …
[32] It is unarguable that a piece of papyrus containing information, a page of parchment with the same information, a copper plate or a tablet of clay, are all documents. Nor would they be otherwise if the method of notation were English, Morse code, or binary symbols. In every case there is a document because there is a material record of information. This feature, rather than the medium, is definitive.
34 Crimes Act 1961, s 217.
35 R v Misic [2001] 3 NZLR 1 (CA). The Court of Appeal was concerned with a section which, at
that time, did not define “document”. It considered that its definition was the ordinary meaning of “document”. There was an expanded definition of “document” for other provisions (those concerned with “forgery”) comparable to the present definition of “document” in s 217. The Court noted at [37] that that expanded definition was enacted in respect of those provisions “to extend an outmoded specific definition which had been of limited scope in its particular statutory application” and therefore did not require that anything other than the ordinary meaning of “document” was intended in respect of other provisions.
[37] The thing or material on which, or by means of which, the information is recorded, stored or supplied (for example, a disc or a computer) is a “document”. The thing or material is still a document even if, in order to reproduce the information, the aid of some other equipment is required. A “document” also means the “material derived … from information recorded or stored or processed by any
device used for … storing … information.”36 It therefore includes the information
that is stored on a computer and not just the computer itself.37
[38] In this case the evidence was that the modus operandi generally38 involved the following steps, and the creation of four copies:39
(a) An advertisement from another publication was scanned on to the computer, using scanning software.40 Scanning created an electronic copy of the document and saved it to the computer hard-drive (Copy
1: the scanned image).
(b)The scanned image saved on the computer hard-drive was copied and pasted into a fax proof template and saved.41 The template contained the name of the publication and other details (such as the terms and conditions that apply to the advertising) (Copy 2: the saved fax proof).
(c) The saved fax proof was then copied and attached to an email and sent by the sending laptop. This copy remained within the email files located on the outgoing laptop. (Copy 3: the sent email with the
attachment.)
36 Crimes Act 1961, s 217(e).
37 Bruce Robertson (ed) Adams on Criminal Law (looseleaf ed, Brookers) at [CA217.05].
38 The only evidence of any variation to these steps related to a small number of examples where the advertisement appeared to have been created by one of the defendants from sources other
than scanning a pre-existing advertisement.
39 Mr Clive Hudson, the SFO’s principal electronic forensic investigator, gave evidence
demonstrating these steps.
40 Mr Hudson gave evidence that the two laptops (exhibits 94 and 95), found on the dining room
table of the defendants’ home in Port Waikato when it was searched on 24 October 2012, had installed on them a Ricoh Aficio SP C2222SF model printer/scanner.
41 Mr Hudson gave evidence that the two laptops (exhibits 94 and 95) contained a template of a fax proof for each of the publications that are the subject of the charges. He also gave evidence that the laptops had Adobe Photoshop installed on them. He demonstrated how that software was used to cut and paste and edit an image on the fax proof template.
(d)The sent email with the attachment was received by the recipient’s computer. This copy was held within the email files on the recipient’s computer. (Copy 4: the received email with attachment.)
[39] I accept the Crown’s submission that all four copies are within the meaning of “document”. They are all a set of electronic data, stored on computer hard-drives, which convey information (in a form which we can interpret through various computer programs).
Reproduction
[40] Section 258 requires that the defendant “makes a document or causes a document to be made that is, in whole or in part, a reproduction of any other document.” It is therefore not sufficient that a defendant makes a document. The document must be one that is in whole or in part a reproduction of another document.
[41] In its opening the Crown said that it relied on the fax proofs which were made by the defendants (and thereafter sent to the victims). The fax proofs contained images of advertisements which were not originally generated or prepared by the defendants but were reproductions or partial reproductions of advertisements previously placed by those victims in other publications (that is, they are reproductions or at least partial reproductions of “another document”).
[42] Counsel for Mr Middeldorp contends that the fax proof ultimately received by the customer is not a “reproduction” of the original advertisement from the publication (which was scanned and copied into the fax proof). He submits this because once scanned, a fax proof is digital data contained in a computer file. As the process goes from scanning, to pasting, to emailing, different file formats are generated and none of them are a reproduction of the physical image that existed on the magazine page.
[43] In anticipation of a technical argument as to what amounted to a “reproduction”, the Crown called the evidence from Mr Hudson discussed above. Mr Hudson explained that when the image is scanned it is in a pdf format (read-only
and vector based). Adobe Photoshop is used to copy and paste the scanned image into the fax proof template. Once it is in Adobe Photoshop for that purpose it is pixelated and data-based. Once the fax proof with the image is saved it is stored and able to be attached to an email. No change of format occurs at that point. Counsel for Mr Middeldorp submits that this evidence does not show that that data has remained the same: the electronic code may have altered with the different formats that the copying process involves.
[44] As I understand it there are two arguments. First, digital data cannot be a reproduction of a physical image on a magazine page because digital data has no physical resemblance to digital data. Secondly, the Crown must prove that as the digital data goes through the process that begins with scanning and ends with an email received by the recipient, it remains a reproduction of the data from the previous step (as distinct from a re-creation of that data) even though it may involve
the generation of data in a different format.42 The submission is that the document is
the data, and the data must be in the same code or format as the data it is said to reproduce to constitute a reproduction.
[45] Physical resemblance in format is not, however, required by the section. The document manifests itself in an image that can be seen on the computer screen. That displayed physical image does bear a physical resemblance to the image in the magazine.43 That one physical image is displayed on a paper copy while the other is displayed on a computer screen does not alter the fact that the computer screen version is a reproduction of the paper version. To hold otherwise would be contrary
to the point that the important feature of a document is that there is a “material record of information” rather than “the medium” which provides that record.
[46] The same point applies to Copies 2, 3 and 4 (as identified in Mr Hudson’s
evidence). The expanded definition of document was intended to capture the various
42 See Sibley v Police (1995) 13 CRNZ 29 (HC), discussed later. In that case a second written agreement was prepared and an earlier written agreement was destroyed. The second written agreement intentionally included a different date to the original. It was viewed as being a “re- creation” rather than a “reproduction.” Irrespective of whether that distinction was correct, the computer processes that copy the image are the functional equivalent of a photocopier. Computer copying is the kind of copying intended to be caught by the section.
43 Mr Woolford gave evidence that of the 663 scanned images, approximately 96 per cent were visually identical or nearly identical to the images scanned from the source documents.
forms in which information may be stored, recorded or supplied in the computer era.44 Hence the definition of document is wider than the data in the format in which it is recorded or stored on the computer. It includes that data as displayed on the computer (being material “derived … from information recorded or stored or processed by any device used for … storing … information”45). The computer processes make a copy (confirmed by what is displayed on the computer screen) of that information and it is irrelevant that the data format which the computer uses to record or store that information may have changed in the process (just as it is irrelevant that a computer copy of a document is not in the same medium as a paper version of it).46
[47] The Crown in closing refined what it relied on as a “reproduction”. It advised that it did not rely on Copy 1 (the scanned image) as the relevant reproduction.47 The Crown instead submits that:
(a) Copy 2 (the saved fax proof) is a reproduction, or a partial reproduction, of the scanned image.
(b)Copy 3 (the sending email with attachment), which is stored in the sent items of the email software that is used, is a reproduction of the fax proof saved elsewhere in the computer (when the image is pasted
into the fax proof template and saved).
44 Discussed further below (in relation to the amendments which brought in the former s 258).
45 Crimes Act 1961, s 217(e).
46 This conclusion is supported by Power Beat International Ltd v Attorney-General [2000] 2
NZLR 288 (CA). In that case Power Beat was charged under the former s 258(1)(b) (s
266A)(1)(b)) for copying a computer programme. It was argued (at [25]) that “the document copied must be the same type of document as the original, for example, if the original is a CD- ROM the copy must be a CD-ROM.” The Court of Appeal rejected this argument saying that there was nothing in the section to support that submission, and that both that section and the definition of document envisaged the copy document being in a different form to the original (at [27]). Moreover, even if a change in file format was relevant, Copies 3 and 4 are the same file format as Copy 2 so the point cannot apply to Copies 3 and 4.
47 This was for two reasons. First, scans were not identified for all the fax proofs. That is not necessarily because they did not exist, but because the process involved in finding them (which was labour intensive and time consuming) was with reference to the time a fax proof was sent. It is likely that in this process not all of the relevant scanned images were located. Secondly, not all of the scanning of the images will have been concurrent with the mens rea. An example is where one single scanned image was made and used for a number of publications over time.
(c) Copy 4 (the received email with attachment), which is the electronic copy created on the recipient’s computer, is also a reproduction of the saved fax proof. 48
[48] Of the 663 scanned images that were identified as being used in the 951 fax proofs, six appeared to have been created using computer software, rather than being a scanned image of an existing advertisement from another publication. The Crown submits that the section does not require that the reproduction be of a document created by another person. Therefore if a defendant created an advertisement and then copied that into a fax proof, the saved fax proof is a reproduction of the advertisement he or she created, just as if the saved fax proof contained a copy of a scanned image from another publication.
[49] Counsel for Mr Middeldorp responds that this offence was introduced with amendments intended to deal with the various forms of forgery. He submits that it is an offence directed at creating a false document or, in other words, an imitation. That is, it is directed at making a document that purports to be a genuine or original document when in fact it is a reproduction. He submits that this is why the section does not simply require that a document be made with the requisite intent. Rather it requires that the document be made wholly or in part a reproduction of another document. He submits that the reproduction charges are misconceived because in fact the copies created by the defendants and sent to the complainant businesses are recreations, not reproductions.
[50] These submissions raise the issue of what is meant by “reproduction”. The offence is part of a number of offences that come under the heading “[f]orgery and counterfeiting” in the Crimes Act. It was first introduced in 1973 in response to a recommendation from the Criminal Law Reform Committee,49 which in turn was a
response to the Court of Appeal’s decision in De La Rue v The Queen.50 That case
48 All or almost all the fax proofs were sent as attachments to emails. If any were sent by facsimile then Copy 3 would be the fax proof as fed into the fax machine and Copy 4 would be the facsimile received by the business.
49 Criminal Law Reform Committee Report of the Criminal Law Reform Committee: Forgery
(1972).
50 De La Rue v The Queen [1971] NZLR 532 (CA).
was concerned with what were then the forgery provisions of the Crimes Act.51
Forgery involved the making of a “false document.” Circumstances that would make a document false were specified. Those circumstances had in common that the document would be in some material part misleading. The Court of Appeal held that a document which contained an obvious partial obliteration did not come within the
definition (the obviousness meaning that it could not be misleading).52
[51] The Criminal Law Reform Committee said about this decision:
... This has perhaps become a matter of importance only with the introduction and extensive use of photocopy machines. An alteration which is obvious in the original document may be quite impossible to detect in a photocopy, but it is the original to which the definition of the offence of forgery relates. ...
When one begins to consider the situation … it … becomes obvious that the use of a photocopying machine offers almost unlimited possibilities for the manipulation of a documents or documents for fraudulent purposes.
[52] It considered that a new offence was necessary to cover “all the forms of dealing with a document that we have noted, and minor alterations not now covered by the existing law, so long as they are done with a fraudulent intent.” It noted that its proposed new offence was deliberately drafted “fairly widely” and without specifying in “too much detail” the “various ways in which a document or documents may be ‘doctored’ in the course of being reproduced by modern methods.” The intent was regarded as the important thing. Because the offence was regarded as “akin to forgery” it was proposed that the maximum penalty be the same as for forgery.
[53] It is apparent that, in addition to the prospect of photocopiers giving rise to new problems, computers were also in contemplation. The Criminal Law Reform Committee went on to advise that it was “undesirable in today’s circumstances” to leave “document” undefined for the purposes of the forgery provisions. It proposed that a new definition be enacted to cover “photographs, tapes, sound-recordings and similar devices, and computer-stored information and all the forms in which it may
be retrieved.”
51 At that time, ss 263 and 264 of the Crimes Act 1961.
52 Forgery is concerned with a document that purports to be a genuine document (that is, one that purports to have been made by someone other than the person who in fact made it).
[54] The amendments were enacted in the form proposed by the Criminal Law Reform Committee.53 In 2003 the forgery provisions were again amended to their present form. For present purposes the relevant amendments to what became s 25854 were:
(a) the “with intent to defraud” became “with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to cause loss to any other person”; and
(b)the wording of s 258(1)(b) was simplified to its present wording, but did not alter the essential feature that “the document” be in whole or in part a “reproduction of any other document”.
[55] In addition a new definition of “false document” for the purposes of the forgery provisions was introduced. This definition was specific to the offence of forgery55 and the offence of using a forged document.56 That definition has remained unchanged since the 2003 amendments. For present purposes the relevant part of that definition is as follows:
false document means a document—
…
(d) that is, in whole or in part, a reproduction of any other document, and that purports to have been made by or on behalf of a person who did not make it or authorise its making, or by or on behalf of a fictitious person; or
…
[56] This definition requires that the document be in whole or in part a
reproduction (as is the case with s 258). But in order to be a “false document” and
53 They were enacted pursuant to the Crimes Amendment Act 1973 and took effect on 1 January
1974. These amendments included the definition of document for the purposes of forgery, which has since become s 217 and is now the general definition of “document” for Part 10 offences. They included the precursor to s 258 (s 266A) and also the precursor to the related offence that is now s 259 (s 266B) At the second reading of the Crimes Amendment Bill the Honourable Dr A.M. Finlay, the Minister for Justice, recited the Law Committee’s rationale for the proposals.
54 Formerly s 266A.
55 Crimes Act 1961, s 256 (previously s 264).
56 Section 257 (previously s 266).
therefore caught by the two specific forgery offences, it must also purport to have been made by a person who did not authorise it or who is fictitious. That is, the document needs to “tell a lie” about its authorship.57
[57] This history supports the submission for Mr Middeldorp that s 258 was seen as part of the forgery provisions. It was introduced because it was thought that forgery may be achieved in new ways that were not encompassed by the limited scope of the then existing provisions. It envisaged the use of a photocopier and other devices to make a document which could be used to defraud someone. It did not specify the ways in which the document might be made, although documents made from photocopying were in contemplation.
[58] It does not, however, follow from this history that a document is only within the scope of s 258(1)(b) if it is a document derived from another party’s document. The section was drafted more widely than that. In contrast with the definition of “false document” for the purposes of the specific forgery provisions, there is no requirement that the document “purports to have been made by or on behalf of a person who did not make it or authorise its making, or by or on behalf of a fictitious person”. If that meaning is to be given to the section then it can only come from
interpreting the word “reproduction” in that way.58
[59] The New Shorter Oxford English Dictionary definition of “reproduction” has as its first meaning “[t]he action or process of forming, creating or bringing into existence again”.59 Chiefly in relation to printing and photographing it gives the meaning “[t]he action or process of copying a document or image”. In relation usually to furniture it gives the meaning “a piece of furniture etc. made in imitation of a particular style or period.” Synonyms for “reproduction” are copying,
duplicating and replicating.
57 R v Walsh [2006] NZSC 11, [2007] 2 NZLR 109 at [8], citing Professor JW Turner Kenny’s
Outlines of the Criminal Law (17th ed, 1958) at 354-355.
58 The Crown points out that there is a logical disconnect in contending that the an offence designed to capture offending other than forgery, must incorporate the concept of forgery.
59 Lesley Brown (ed) The New Shorter Oxford English Dictionary (4th ed, Clarendon Press, Oxford) at 2554.
[60] The case law on what is meant by “reproduction” in this context is limited. It was in issue in Sibley v Police.60 The defendant had purchased a car and damaged it before it was insured. In order to obtain insurance to cover the damage, the original written agreement recording the true delivery date was destroyed and a new agreement was written out in identical form to the original, except for the date of delivery. The offence was found proven in the District Court. In concluding that the new agreement was a reproduction, the District Court Judge said:61
To reproduce is essentially to produce again, to make anew, to make afresh something already in existence. A reproduction is not necessarily a replication or a copy. It is something which is like, but not necessarily the same, as the object. It reproduces. In the context of this section it is in my view a document which purports to be but is not the original document and may not be identical with it.
[61] The defendant appealed to the High Court which quashed the conviction. The High Court Judge set out the above quote from the District Court judgment. He then referred to the history of the section (which I have discussed above) and disagreed with the District Court’s view that a reproduction was not necessarily a copy. The Judge made no comment on the words in italics although it is apparent that it was rejected as the test for determining whether something was a reproduction. The Judge considered that to be a reproduction of a document, what is made must be a copy of the original document, that is, an imitation. He considered that “to repeat in a more or less exact copy” was the dictionary definition that most accorded with the statutory intent. The Judge considered that the written agreement was rewritten. It was therefore a replacement for the original rather than a reproduction. In any event the evidence did not prove that the document was copied more or less exactly.
[62] The Judge’s view that the rewriting of the agreement was not a reproduction is not relevant for present purposes.62 The important point for present purposes is that there is nothing in the judgment to suggest that the copy must be of a document
made by another party. The forgery concept (falsity of authorship) was not read into
60 Sibley v Police, above n 42.
61 Emphasis added.
62 An alternative view is that one method of reproducing (copying) a document is to rewrite it out again (copying from the original).
the meaning to be given to “reproduction”. A copy that is more or less an exact copy
of another document is caught.
[63] The former s 258(1)(b) also received brief mention in Walsh v R.63 That case concerned documents forged in Amsterdam by Mrs Walsh.64 She faxed the forged documents to victims in New Zealand intending that they would act on those documents as though they were genuine. She was charged with forgery under the predecessor to s 256.65 To establish the offence it was necessary to prove that the document was a “false document” which in turn required that it “purports to be made
by any person who did not make it or authorise its making.” The forged documents in Amsterdam could not be relied on as the relevant documents for that purpose because they were made in Amsterdam. The actus reus for the offence was therefore outside New Zealand. The question was whether the faxes received by the New Zealand victims could be relied on as the forgeries.
[64] The Supreme Court held that the fax copy received in New Zealand was not a “false document” as defined.66 In the principal judgment given by the Supreme Court it was noted that Mrs Walsh could have been charged with the predecessor to s
258.67 That was because:68
It seems clear that, in terms of s 266A(1)(b), Mrs Walsh made documents (the fax copies) that were reproductions of other documents (the Amsterdam originals), and did so in New Zealand; no further question of use of those documents would arise.
[65] It is possible that the Supreme Court meant that the fax copy was a reproduction of the Amsterdam originals Mrs Walsh used in creating the documents that she fed into the fax machine. However a more straightforward reading of that
statement is that “the Amsterdam originals” meant the documents that Mrs Walsh
63 Walsh v R [2006] NZSC 11, [2007] 2 NZLR 109.
64 She created documents by cutting and pasting combinations of false information and excerpts of genuine correspondence, including the letterheads of banks and law firms, which created the impression that they were genuine letters written by those banks and law firms.
65 At that time, Crimes Act 1961, s 264.
66 That definition was concerned with “falsity of authorship” not “falsity of content”. The forgery
in this case was complete before the fax copy was created. In transmitting the fax copy Mrs Walsh represented only that the received fax copy replicated a document that she had in her possession.
67 Crimes Act 1961, s 266A. Tipping J also considered, without elaboration, that s 258 would now cover the situation
68 Walsh v R, above n 63, at [27].
created and fed into the fax machine. That is, the fax copies received reproduced the documents fed into the fax machine in Amsterdam. The only question was the intent with which that was done. That the documents fed into the fax machine in turn came from documents from other parties would presumably have been relevant to intent. The Supreme Court did not need to address this because it was satisfied that all the elements for the offence of uttering forged documents had been proven, and convictions on this offence were substituted for the forgery convictions.
[66] In my view the background to the enactment of the reproduction offence, the ordinary meaning of “reproduction”, the absence of the express requirement that the document purports to be one made or authorised by someone who did not make or authorise it (in contrast with the definition of “false document”) and the case law all support the view that a document is a reproduction of another document if it is a copy of it. A copy of a document made by a computer process is within the section. It is not required that the reproduced document is made by another person and/or that it purports to be made by someone other than the person who did make it. The reproduction offence is different from using a document with intent in that it involves the further step of making a document which in whole or part duplicates another document. Making a document that is a reproduction of another document is criminalised only if it is done with the relevant intent.
[67] I therefore accept the Crown’s submissions that Copy 2, Copy 3 and Copy 4 are all “documents” that are “in whole or in part, a reproduction of any other document.” It does not matter whether a defendant has simply copied a document that he or she created in the first place or has copied another person’s document. The question is whether it was done with “intent to … cause loss to any other person.”
Intention to cause loss to any other person
[68] Because s 258 is a dishonesty offence, the Crown must prove that the defendants dishonestly intended to cause loss to any other person.69 Asking for money is not in and of itself enough. No loss arises if the person from whom the
payment is sought gets the benefit they expected for that payment. In the
69 Otimi v R [2012] NZCA 216.
circumstances that arise here, this element will be proven against a defendant in respect of each fax proof if:
(a) the defendant intended that the business to whom the fax proof was sent would have an expectation as to the benefits to be derived from authorising the inclusion of the reproduced advertisement in the publication named in the fax proof; and
(b)the defendant did not honestly believe that the business would receive that benefit if they authorised inclusion of the reproduced advertisement in the publication named in the fax proof.
[69] The offence is complete as soon as the document (Copy 2, 3 or 4) is made with that intent.70 It therefore does not matter whether the business authorised the advertisement to be published, nor whether the business paid the money sought.
The alternative charge
Dishonestly using documents
[70] In the alternative, the defendants are charged with dishonestly using documents under ss 228(b) and 66(1) of the Crimes Act. The offence provides:
228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,—
…
(b) dishonestly and without claim of right, uses or attempts to use any document.
[71] The elements of the offence are that:
(a) the defendant used a document; and
70 Crimes Act 1961, s 258(2).
(b)in using the document the defendant intended to obtain a pecuniary advantage or valuable consideration; and
(c) in so doing the defendant acted dishonestly; and
(d) the defendant had no claim of right. [72] A defendant is liable as a party if:
(a) the defendant did something to help or encourage the other defendant to use the document;
(b)the defendant intended that their action would help or encourage the other defendant to use the document;
(c) the defendant knew that the other defendant was using the document with intent to obtain a pecuniary advantage or valuable consideration and dishonestly and without claim of right.
[73] The Crown relies on each “fax proof” as the document that was used. It says
that it was used when sent as an attachment to an email71 to a potential advertiser.72
Although the indictment refers to intending to obtain a pecuniary advantage or valuable consideration, the Crown need only prove one of those intents. Its submissions focus on intending to obtain a pecuniary advantage. That term means “anything that enhances the accused’s financial position.”73 The pecuniary advantage relied upon is the money the defendants sought from the potential
advertisers in the fax proofs. The question is not whether the defendants were
71 In all or almost all cases the fax proofs were sent as an attachment to an email. If any were sent by facsimile the sending in that method would still be a “use” of the document.
72 The Crown notes that it may be that some businesses did not in fact receive the emails that were sent. For example, the wrong email address may have been used. It submits that there is still a “use” by the sending of the email even if it is not proven that it was received. On this point the
Crown refers to R v Hayes [2008] NZSC 3, 2 NZLR 321 at [13]. The Crown submits that if I
considered there was only a “use” once the fax proof was received by a business, then sending the email would at least be an attempt. The indictment does not allege that the defendants “used or attempted to use” a fax proof, only that they used it. The Crown submits that the indictment could be amended so that it also alleges an attempt.
73 At [16].
legally entitled to these sums when they ultimately invoiced for them.74 Accordingly this element is proven by the seeking of payment in the fax proof. Dishonestly75 and without claim of right76 are defined terms. It is not necessary to consider the elements of s 228 in any more detail. That is because, on the facts as proven (as
detailed later), the same verdict would apply to each charge.
Evidence of modus operandi
The publications and the particulars
[74] To establish the modus operandi the Crown called evidence from Mr Woolford. He is a principal investigator with the SFO. He explained the process he followed to compile the schedules from the information obtained from the electronic clones. A schedule was prepared for each publication that was the subject of the charges. These schedules provided, amongst other things, the dates that a fax proof was sent relevant to that publication, the recipient to whom the fax proof was sent, the location of the recipient, the sum of money sought in the fax proof, the name used by the person sending the fax proof, whether the advertisement appeared in any version of that publication and at what page, whether the SFO had been able to reconcile the amount requested with a payment by the recipient, and if so, the date of
that payment.77
[75] Mr Woolford’s analysis establishes the following sequence over the period
covered by the charges.78
74 Adams on Criminal Law, above n 37, at [CA228.03]. As stated in R v Hayes, above n 72, at [12]: “[t]he statutory purpose is to criminalise the use of dishonest means directed to gaining the advantage, even if the accused is otherwise entitled to it”.
75 Crimes Act 1961, s 217.
76 Section 2. The definition of claim of right was amended on 19 March 2012, by s 4(2) of the
Crimes Amendment Act (No 3) 2011. Pursuant to the transitional provision in s 12(1) of that Act, “[t]he amendments and repeals made by this Act do not apply to any offence committed or alleged to have been committed (in whole or in part) before the commencement of this Act and the principal Act as in force before the commencement of this Act continues to apply to any such offence”. Accordingly for conduct prior to 19 March 2012 the former definition applied. The
amended definition applied to conduct on or after 19 March 2012.
77 Some of these schedules were amended in the course of the trial when minor errors were noted as the evidence emerged.
78 These details are derived from schedules produced at the hearing. They were put together by Mr Woolford, the principal investigator of the SFO. He explained the process which he followed to put together the schedules from the information obtained from the electronic clones.
(a) The defendants began selling advertising in The Local Wall Calendar
on 5 July 2011 and ceased doing so on 6 July 2011.
(b) The defendants began selling advertising in Children in the
Community on 18 July 2011 and ceased doing so on 15 February
2012.
(c) The defendants began selling advertising in The Local Business Guide
on 30 August 2011 and ceased doing so on 15 February 2012.
(d) The defendants began selling advertising in Community Guide on
5 March 2011 and ceased doing so on 17 July 2012.
(e) The defendants began selling advertising in Your Local Business Book
on 1 March 2012 and ceased doing so on 19 June 2012.
(f) Ms Banton began selling advertising in Handbrake on 23 July 2012 but that was the only day she did so.
(g) The defendants began selling advertising in Roadcare NZ on 24 July
2012 and ended on 18 October 2012.
(h) Mr Middeldorp began selling advertising in The NZ Fire Fighter on
16 October 2012 but that was the only day he did so.
The steps involved
[76] From Mr Woolford’s analysis of the electronic data on the clones, his evidence was that the “vast majority” of the 951 fax proofs which are the subject of the charges followed a pattern:
(a) one of the defendants (using an alias which varied for each publication) contacted an intended recipient by telephone using contact details from the source document (further contact details were noted on the source document);
(b) the advertising image was scanned from the source document;
(c) the scanned image was pasted into a fax proof template which contained details specific to the publication title; and
(d)the fax proof template was emailed as an attachment to the intended recipient under the cover of an email from the defendant (using the alias for that publication).
[77] Mr Woolford arranged for all the emails to be copied out of the clones and onto an SFO laptop. From that, he was able to illustrate how the emails with the attached fax proofs would have appeared on the sending and receiving computers. He illustrated some examples in Court. I will refer to one such example, which related to Community Guide. Mr Woolford explained and showed the following:
(a) Scanned image: the electronic image contained an advertisement for
858 George Street Motel. The electronic image file type was a pdf created on 10 April 2012 at 12.17 pm. It was located on one of the two laptops seized by the SFO at the time of the 24 October 2012 search, being the laptop with the username “John”. It was located on the desktop in a folder called “old scans” which was a sub folder of “scans”.
(b)Email: the email was dated 10 April 2012 and sent at 12.59 pm. The sending email address was [email protected]. The receiving address was [email protected]. The subject heading was Community Guide. The username of the sending email account was “John”. The text of the email read:79
Hello Sally
Further to our phone call please find attached the artwork for
this year’ s Community Guide.
79 I note that this appears to be an example where both defendants were involved: if there was a telephone call, then it must have been made by Ms Banton (as Karen Scott), and the scanning and emailing were done by Mr Middeldorp (as the user “John” of that laptop).
If all is okay to proceed please reply indicating that all is good to go.
If you wish to make any alterations or replace the artwork please let us know immediately.
Kind regards
Karen Scott
(c) Fax proof: a fax proof was attached to the email. The fax proof relates to Community Guide and is dated 10 April 2012. The fax proof records that the total cost of publishing the advertisement in Community Guide would be $520 plus GST. It contains other terms and conditions. The person authorising the advertisement is recorded as Sally Young. The advertisement on the fax proof is virtually identical to the scanned image referred to above for 858 George Street Motel.
[78] Mr Woolford also provided analysis of the number of scanned images of advertisements that were used in the fax proofs and whether they were identical, nearly identical, bore some common features with, or had no similarities to the advertisements used in the fax proofs. His analysis was that the SFO was able to link 663 scanned images to individual fax proofs. Of these, 557 were scanned images of advertisements and a further 106 were reused. Of those images:
were sent to prospective clients during the period 15 November 2011 to 17 July
2012.
[250] The first fax proof using this template was sent to Te Kouma Harbour Cottages at the price of $495 plus GST. The email to which the fax proof was attached said:
Hello Rose
Further to our phone call please find attached the artwork for this year’s Community Guide. If all is okay to proceed please reply indicating that all is good to go, if you wish make alterations or replace the artwork please let us know
Kind Regards
Bob Scott
[251] The last fax proof using this template was sent to Barcon NZ Ltd at the price of $520 plus GST. The email to which the fax proof was attached said:
Hello Dennis
Further to our phone call please find attached the artwork for this year’s
Community Guide.
If all is okay to proceed please reply indicating that all is good to go,
If you wish make alterations or replace the artwork please let us know immediately
Kind Regards
Karen Scott
[252] Ms Haylock’s evidence has identified that the total amount sought in the fax proofs was $97,359 and the total amount reconciled to payments received by the defendants was $23,791.75. There is evidence that three copies of this publication were printed: one copy on 20 April 2012 and two copies on 14 September 2012.
[253] I am sure that the general modus operandi (involving creating the fax proof on the relevant template and attaching it to an email to the targeted business, usually preceded by a prior sales call) was used during this period. Mr Woolford reviewed
the documentation. His evidence is confirmed by all the witnesses who gave evidence (those relating specifically to Community Guide and those who gave evidence about other publications) and the documents viewed in Court that related to these witnesses. I am therefore sure that if a defendant was involved in making or causing to be made Copies 2, 3 or 4 of any fax proof itemised in the schedule to the charge, the actus reus of the charge is proven against that defendant. Likewise, if a defendant helped or encouraged the other defendant to make or cause to be made Copies 2, 3 or 4 of any fax proof, the actus reus of the charge is proven against that defendant as a party.
[254] To prove the mens rea of the charge it must be proven that each defendant intended that the person receiving the fax proof would expect that if they approved the fax proof their advertisement would be included in a publication that would be distributed in a material way, and the defendant did not honestly believe that the publication would be distributed in that way.
[255] The evidence establishes that the same misrepresentations were made about the places to which the publication would be distributed.177 There are likely to have been instances where no specific representations about distribution were made and there are instances where there is no evidence of any specific representation.
However, as with the other publications, the fax template and accompanying email
177 For example, an email to Geoff Foster of Mangiatoto Health Services from “Bob” at Community Guide, on 18 January 2012, said that Community Guide “is distributed free throughout the region to house and PO Boxes. Supplying details of upcoming events medical services and business information to households and businesses.” An email to Te Oranga Whānau Services in Kaitaia from “Bob Scott” of Community Guide, on 28 February 2012, said that Community Guide was “[d]istributed free through Northland Region, going to schools, business’s, clubs and PO Boxes”. An email to Ranburn Life Care in Whangarei from “Karen Scott” of Community Guide, on 11 April 2012, said that it “comes out yearly and is distributed to Dr’ s surgeries, clubs (RSA’s, Citizen Advice, Bowling clubs, etc) Also placed into PO box’s and rest homes throughout the region. Sure I have left out a few more places, manager not here to confer with.” There is also evidence of representations being made subsequent to the approval of advertisements (which supports an inference that they were also made to some recipients at the time the fax proofs were sent). For example, Alma Dunstan of All Safe Storage in Porirua telephoned “Peter Carol” because the business had been receiving invoices for Community Guide and she believed that no authority had been given for the advertisement. She asked what Community Guide was and Mr Middeldorp replied that the guide “goes out through the district
…”. Bernie Martelletti of Te Puke spoke to Mr Middeldorp as “Dave Price” on 10 August 2012. He was concerned and dissatisfied about Community Guide because he was led to believe that he was advertising in a “community” guide and the advertisements were “over the whole bloody New Zealand” and “I can’t find anybody in, around my area that’s received one of these magazines.”
themselves made representations. Each fax proof and email was intended to give the impression that the publication was legitimate. Recipients were asked to approve advertising in “Community Guide for your region”. The image with that title depicted something apparently pertinent having been circled by a reader of that guide. Anyone reading the title and looking at the image would take from it that Community Guide was a publication that was targeted particularly at their community. Witnesses consistently gave evidence that, for the money that was sought from them in the fax proofs, they expected the publication would be
distributed in a meaningful way.178 That must have been the case.
[256] As to the belief of the defendant, the recipients of the fax proofs were located throughout New Zealand. For example, they were located in Katikati, Russell, Whangarei, Auckland, Matamata, Te Puke, Rotorua, Porirua, Christchurch, Arrowtown, Winton, and Milford Sound. To achieve material coverage in each of those communities, thousands rather than hundreds of copies of Community Guide would need to be printed. A number of the fax proofs were sent in or after April
2012. For the reasons discussed earlier, I am sure that from that time, the defendants knew that they could not and did not intend to publish and distribute the magazine in any material way. However I am also sure that the defendants knew from the outset that they could not, and did not intend to, publish and distribute Community Guide in any material way.
[257] There is no evidence of Community Guide being printed until 20 April 2012. Even at that stage, Community Guide appears not to have been finalised because it did not, for instance, have a contents page. Only one copy of Community Guide was printed at that time. This contrasts with an intercepted communication between Mr Middeldorp and Ms Dunstan at All Safe Storage on 15 August 2012. In that
conversation Ms Dunstan asked Mr Middeldorp how often Community Guide went
178 For example Stephen Hall of Brake & Clutch Rebuilders Ltd noted that for the price of the fax proof they were sent, they expected “in the vicinity of at least 1,000 copies you know if it was just local business. If it was distributed around the community at a wider circle it would probably be quite a bit more”. Bonnie Robinson of Howick Baptist Healthcare said that her expectation was “that we would be in a publication that was distributed in our community”. Sally Butler of Papatoetoe Residential Care said that for the price of the fax proof they were sent, they would have expected the advertisement to be “appearing in several hundred local magazines, as brochures that were in various public places like doctors’ surgeries and other local places”.
out. Mr Middeldorp said “just the once” and that it went out “about two, two maybe two, maybe three months ago now, I’d need to check that, it went out a while ago anyway.” Ms Dunstan said that she had never seen a copy of it. Later that same day Mr Middeldorp spoke again to Ms Dunstan. He said he would send her another copy of Community Guide. Ms Dunstan gave evidence. She was clear that no copy had ever been received.
[258] Barcon NZ Ltd was the last business to receive a fax proof for Community Guide. This was on 17 July 2012. If Community Guide for Barcon NZ Ltd’s region was distributed in March 2012, then Barcon NZ Ltd’s advertisement was too late. Barcon NZ Ltd’s advertisement appears in the version of Community Guide that Mr Patel printed on 14 September 2012. That was seven days before Barcon NZ Ltd paid its invoice for $520 plus GST. It is a safe inference that Mr Middeldorp swapped Barcon NZ Ltd into the magazine (it replaced “The Mobile Coffee Man Café” on that page) and used this to extract the outstanding invoice.
[259] I provide one example in relation to Ms Banton that the charge is proven against her. An email dated 27 February 2012 was forwarded to Waikato Engine Reconditioners Ltd. The metadata of the email identified that it was located in “Banton … Sent Items”. The email attached a fax proof with an advertisement for Waikato Engine Reconditioners Ltd for a price of $495 plus GST. The email was in these terms:
Hi Wayne
As per phone conversation, I have attached the advert proof for The
Community Guide.
If you could attend to this immediately, I would be appreciative.
If you are not wanting to make any changes please push the reply button with your approval. Any changes needed just inform us what is necessary.
Thanks for your support
Karen Scott
Community Guide
[260] Wayne Archer of Waikato Engine Reconditioners Ltd gave evidence. He recalled seeing the fax proof. He did not remember the email but said that he obviously received it. He understood Community Guide would have advertising in the Waikato and upper North Island region. He approved the fax proof on that basis. He did not recall asking for distribution numbers. He paid the sum.179
[261] In this example I am sure that the following is proven:
(a) Ms Banton made or caused to be made Copy 2 (the fax proof on the template), Copy 3 (the sending email attaching the fax proof) and Copy 4 (the receiving email with the attached fax proof);
(b)Ms Banton intended to cause Mr Archer to believe that, if he approved the advertisement, the advertisement would appear in a publication called Community Guide, which would be distributed in the Waikato community in a material way;
(c) Ms Banton did not honestly believe at that time that a publication called Community Guide, with the Waikato Engine Reconditioners Ltd’s advertisement, would be distributed in the Waikato community in any meaningful way.
[262] I also provide one example that the charge is proven against Mr Middeldorp. On 5 April 2012 an email was sent to Kohatu Rest Home in Waitara. The metadata recorded that it came from “Middeldorp … Sent Items”. The associated fax proof, with the advertisement for Kohatu Rest Home was for a price of $460 plus GST. The email was as follows:
Hello Sandra
Further to our phone call please find attached the artwork for this year’s
Community Guide.
If all is ok to proceed please reply indicating that all is good to go, If you wish to make alterations or replace the artwork please let us know immediately.
179 Ms Haylock reconciled this to a payment received by the defendants.
Kind regards
Brian Morris
[263] Sandra Heal from Kohatu Rest Home gave evidence. She believed she could recall a conversation with Brian Morris. She had a look at the advertisement. It looked like their standard advertisement and that it was all “kosher” so she approved it. She believed that the discussion with Brian Morris covered where Community Guide would be distributed. She could not recall whether they discussed volume of distribution. She agreed to advertise in Community Guide. She expected that the advertising would be in a guide for their local region, which was Taranaki. She paid
for the advertising.180
[264] In this example I am sure that the following is proven:
(a) Mr Middeldorp made or caused to be made Copy 2 (the fax proof on the template), Copy 3 (the sending email attaching the fax proof) and Copy 4 (the receiving email with the attached fax proof).
(b)Mr Middeldorp intended to cause Ms Heal to believe that, if she approved the advertisement, the advertisement would appear in a publication called Community Guide, which would be distributed in a material way in the Taranaki region.
(c) Mr Middeldorp did not honestly believe at that time that a publication called Community Guide, with the advertisement for Kohatu Rest Home, would be distributed in the Taranaki region in any meaningful way.
[265] Mr Woolford’s analysis, as summarised in the schedule provided for this publication, has identified that of the 193 fax proofs, 54 were sent under the Bob Scott/Bob Scot alias, one was sent under the Kay Evans alias, 15 were sent under the Brian Morris alias , and the balance (124 fax proofs) were sent under the Karen Scott
alias. The analysis has not identified in respect of every particular whether the
180 Ms Haylock has reconciled this to a payment made by direct credit on 29 June 2012.
person who made the call was also the person who made the fax proof and/or sent the email. As with the other publications it is likely that in some instances one defendant helped the other. Where that occurred I am sure that they did so with the relevant intent.
[266] I am therefore sure that Ms Banton either committed the actus reus of this charge or helped or encouraged Mr Middeldorp to do so on at least 123 occasions (being the 123 particulars where her alias was used). I am also sure that Mr Middeldorp either committed the actus reus of this charge or helped or encouraged Ms Banton to do so on at least 54 occasions. In every case where they did so, I am sure that they did so with the relevant intent.
[267] It is not necessary to establish the precise number of occasions where each defendant was involved to prove the charge. Subject to any submissions that may be made at sentencing, I do not regard the number of sales calls or emails one defendant may have been involved in, as against the number made by the other defendant, as necessarily reflecting any difference in their respective culpability.
Community Guide: alternate charge 26
[268] No verdict is necessary on this charge in view of my verdict on charge 26A.
Find a Business: charge 27A
[269] The charge is that:
… Johannes Hendrik Maria Middeldorp and Noelene Kay Banton between 22 January 2012 and 26 July 2012 at Wellington or elsewhere in New Zealand, with intent to cause loss to other persons, did make documents that were, in part, a reproduction of other documents, namely “fax proof” documents that were in part reproductions of other documents.
Particulars: Purported magazine entitled “Find a Business”.
1. The accused helped, encouraged, made, or caused to be made, “fax proof” documents purporting to be an offer for inclusion of an advertisement in a legitimate magazine publication with intent to cause loss to any other person;
2. A fax proof is a document that in part reproduces another document;
3. A fax proof is made with intent to cause loss to any person;
4. A fax proof purports to be associated with a legitimate magazine publication;
5. The details surrounding the publication and circulation of the magazine are false;
6. Fax proofs may form part of a contract with a person obtained by deception for advertising services and publication in the fraudulent magazine;
7. Fax proofs were made in connection with the promotion of the fraudulent publication of the magazine entitled Find A Business; and
8. The schedule annexed to the indictment marked 27 records the details of fax proof documents which are reproductions.
[270] The schedule marked 27 annexed to the indictment contains 194 items (that is, particulars) for this charge, compared with 191 identified fax proofs. The charge is proven against a defendant, if one of the particulars is proven against that defendant, whether as the person who made or caused to be made the relevant document, or because they helped or encouraged that person with the relevant intent.
[271] The fax proof template that relates to this charge was headed as follows:
[272] Mr Woolford’s analysis identified that the 191 fax proofs using the template were sent to prospective clients during the period 23 April 2012 to 25 July 2012. The first fax proof using this template was sent to Moore Vista Residential Care at the price of $495 plus GST. The email to which the fax proof was attached said:
Hello Anne
Following on from today’ s phone call here is the Proof for the” Find a business” as discussed.
If no corrections are required, please reply confirming that the art work is cleared to proceed for printing.
If there are errors to the art proof, please let us know as soon as possible. Thank you for your support
Regards Peter Carol Art Room
[273] The last fax proof using this template was sent to Taumarunui Four Square on
25 July 2012 at the price of $350 plus GST. The email to which the fax proof was attached said:
Hi Sarah
The paperwork for Find a Business has been attached for you to check, to confirm that details are correct for print.
If no changes are needed could you reply with a “OK” on return email.
Please inform us if any alterations necessary by email. Thank you for your support
Anna Thomas
Find a Business
[274] Ms Haylock’s evidence has identified that the total amount sought in the fax proof was $95,979.35 and the total amount reconciled to payments received by the defendants was $23,569.25. The evidence is that in total 19 copies of this publication were printed: 10 copies on 1 August 2012, three copies on 4 September
2012, and six copies on 14 September 2012.
[275] I am sure that the general modus operandi (involving creating a fax proof on the relevant template and attaching it to an email to the targeted business) was used during this period.181 Mr Woolford reviewed the documentation. His evidence is
confirmed by all the witnesses who gave evidence (those relating specifically to Find
181 Many of the emails attaching fax proofs do not refer to a prior telephone call. It may therefore be that with this publication the defendants sent a number of emails without having made a prior call.
a Business and those who gave evidence about other publications) and the documents viewed in Court that related to these witnesses. I am therefore sure that if a defendant was involved in making or causing to be made Copies 2, 3 or 4 of any fax proof itemised in the schedule to the charge, the actus reus of the charge is proven against that defendant. Likewise, if a defendant helped or encouraged the other defendant to make or cause to be made Copies 2, 3 or 4 of any fax proof, the actus reus of the charge is proven against that defendant.
[276] To prove the mens rea of the charge it must be proven that each defendant intended that the person receiving the fax proof would expect that if they approved the advertisement it would appear in a publication that would be distributed in a material way, and that the defendant did not honestly believe that the publication would be distributed in that way.
[277] As to the expectations of recipients, there is evidence of specific representations as to where the publication would be distributed.182 It is a safe inference that the “through the region” type representations were made to any callers who sought this information in view of the evidence about that for the other publications. The script for Peter Carol found during the search of the defendants’ home on their arrest noted “approx 400”. There will also have been instances where
no specific representations about print numbers and distribution were made or where there is no evidence of any specific representation.
[278] Irrespective of which of these applied to a particular recipient, every fax proof sent to a recipient was a representation to that recipient. In each instance the
182 For example, an email from Anna Thomas (metadata identifying its location as “Noelene … Sent Items”) dated 28 May 2012 was sent to Aria Retirement Village located in Auckland stating that the publication “gets distributed free of charge to clubs, Dr surgeries, homes.” An email from Anna (metadata identifying its location as “Noelene … Sent Items”) dated 22 June 2012 was sent to Aria Villages and Beechworth Home & Hospital in Auckland stating that Find a Business “is going to Clubs ,everywhere where senior citizens gather, Dr’ s Surgeries, Chemists, business’ s and homes, free of charge”. An email from Peter (metadata identifying its location as “John … Sent Items”) dated 20 June 2012 was sent to Captain’s Quarters Motor Inn in Cambridge stating that Find a Business is to be “distributed throughout the greater Waikato region.” Additionally, witnesses gave evidence of their understanding of the publication’s distribution. For example, Brendon Burgess of Burleigh Rest Home in Invercargill said “my understanding is this advertising was going to be done locally”. Similarly, Talitha Barrington-Austin of Tamahere Boarding Kennels & Cattery in Cambridge recalled being told that it was being distributed “locally”.
fax proof and accompanying email were intended to give the impression that the publication was legitimate. Recipients were asked to approve advertising in Find a Business for a fee (which, depending on the recipient, ranged from $270 to $1,495). The representation was that, if you send your approval, in return for your payment your advertisement will appear in this publication which will be printed and distributed in a legitimate way. The name Find a Business represented that the publication could be a resource for people wanting to find the contact details of businesses. Witnesses consistently gave evidence that, for the money that was sought from them in the fax proofs, they expected the publication would be
distributed in a meaningful way.183 That must have been the case.
[279] As to the belief of the defendants, the recipients of the fax proofs were located around New Zealand, for example, Kaitaia, Kerikeri, Auckland, Cambridge, Thames, Gisborne, New Plymouth, Taupo, Taradale, Levin, Hokitika, Haast, Ashburton, and Ranfurly. In order to achieve any material coverage throughout those regions, thousands rather than hundreds of copies of Find a Business would need to be printed. All of the fax proofs were sent after 23 April 2012. For the reasons discussed earlier, I am sure that from that time the defendants knew that they could not, and did not intend to, publish and distribute the magazine in any material way.
[280] Insofar as there was printing, it was done for the purposes of debt collecting. That is made clear from intercepted telephone conversations between Mr Middeldorp and Mr Hendon. In particular, on 25 July 2012 Mr Middeldorp told Mr Hendon that he was intending to put Oxford Court “on a page by herself” in the context of discussing obtaining payment from the victim. On 26 July 2012
Mr Middeldorp told Mr Hendon that he needed to get the “latest book done so I can print pages off to send them to people”. He discussed that he would probably email
the page as well as print it out to send with the invoice. Mr Hendon and Mr
183 For example, Diana Le Mon of Kimihia Home and Hospital noted that for the amount her business paid, she thought the distribution would be either to the “North Island or nationwide”. Sandra Heal of Kohatu Rest Home said that for the amount given, she expected that “this magazine was going to be distributed to, um, households in the Taranaki region”. Geoffrey Foster of Maniototo Health Services said that for the amount requested, he would be “expecting a very wide distribution … at least South Island wide”.
Middeldorp agreed that, if he did both, then there was a better chance of getting payment.
[281] It is apparent that Mr Middeldorp then made up the magazine. In an intercepted telephone conversation on 1 August 2012 Mr Middeldorp told Mr Hendon that he had just finished the magazine. In a subsequent conversation later that same day, Mr Middeldorp told Mr Hendon that he finished the magazine last night, that Ms Banton proofed it, that he had sent it off to get printed at 1 pm, and that at 3 pm the printer said the magazines were ready to be picked up. At this point the following exchange took place:
MIDDELDORP But ah, I did ah … finish the magazine last night and Noelene proofed it and then ah I made the changes and she proofed it again and I sent it off to get printed at one o’clock and at three o’clock he said they’re ready to pick up.
HENDON (Laughs), what the big 4 copies? MIDDELDORP (Laughs), 400.
HENDON 400? MIDDELDORP (Laughs).
HENDON Fucken hell, over the top. MIDDELDORP Yeah as many as are required anyway.
[282] There is no doubt that Mr Middeldorp is referring to Find a Business. That is because on 1 August 2012 Mr Patel received an email from Mr Middeldorp attaching an electronic copy of Find a Business. Mr Patel printed 10 copies of that publication that day. Although there were more than 10 debtors, a copy was not required for every debtor. That is because Mr Middeldorp was only sending them a scan of the page in which the advertisement appeared. On 2 August 2012 Mr Middeldorp and Mr Hendon discussed that sending a book “causes problems”. Mr Middeldorp said he was getting “a few printed in case somebody says I want a … book” and “the other ones I’m actually cutting the book up”.
[283] That this was Mr Middeldorp’s approach is confirmed by an intercepted telephone conversation with Mr Backman on 8 August 2012. In that conversation
Mr Middeldorp told Mr Backman that he had “just sent out about 45 emails” and that it took him almost two days because he had to print out the forms, photocopy the pages of the magazine, put them in a scanner and email them to the people, and that to do this for each person took about 10 minutes.
[284] One example of a debtor was Tania McNabb of McNabb Decorating Ltd. She received an email from Peter Carol of Find a Business on 7 August 2012, attached to which was an invoice and a page showing a scan of an advertisement for McNabb Decorating Ltd. The email requested payment. Ms McNabb contacted Find a Business to express dissatisfaction with the quality of her advertisement and the fact that it had appeared next to an advertisement for a business in Te Awamutu when she had been told the magazine was being distributed in the Northland region. She was told that she would be contacted and provided with an explanation. That did not occur. She did, however, subsequently receive a copy of the printed booklet. In this version, her advertisement occupied a full page, and the advertisement relating to the Te Awamutu business had been moved. Despite her misgivings, Ms McNabb then paid the invoice.
[285] There was also evidence that other businesses had not seen the publication in their area.184
[286] As with the other charges, I provide one example in relation to Ms Banton that the charge is proven against her. An email dated 4 May 2012 was forwarded to Kamo Home & Village Charitable Trust, a business located in Whangarei. The metadata of the email identifies that it was located in “Banton … Sent Items”. The email attached a fax proof with an advertisement for Kamo Home & Village for a price of $590 plus GST. The email was in these terms:
Hi Zoe
Have enclosed the paperwork for Find a Business for you to check to confirm details are correct.
184 For example, Alma Dunstan of All Safe Storage said that they “never received any copies of anything from these, these people”. Kerry Lorch of Leopard Hotel noted that they “never got copies of anything of the books”. Betty Ann Collins of Central Service Centre and Marine said that she “didn’t get a copy of whatever it was that it was supposed to have been.” Penelope Sands of Environmental Products (NZ) Ltd said that she did not receive a copy even though such operations “normally send you through a copy of the magazine or whatever it’s in”.
If no change is needed could you reply with a “OK” on return email.
Inform us if any alterations necessary by email. Thank you for your support.
Anna Thomas
Find a Business
[287] Zoe Pothan (now Berry) gave evidence. She received these documents and said that she recalled speaking to Anna Thomas. She understood the advertisement would be in a booklet that would be distributed throughout the community, being Whangarei and Kamo. She remembered this because they were nearing the end of the fiscal year and had money left over in the advertising budget, as well as vacancies in the village. She said that they would not normally advertise in this kind of publication but they needed to generate business. She replied on 4 May 2012 saying “All good. Thank you.” She subsequently asked for a copy of the advertisement because it had been inadvertently deleted from Kamo’s system. There were further emails from Anna about this. The invoice for the advertisement was
paid.185
[288] In this example I am sure that the following is proven:
(a) Ms Banton made or caused to be made Copy 2 (the fax proof on the template), Copy 3 (the sending email attaching the fax proof), and Copy 4 (the receiving email with the attached fax proof);
(b)Ms Banton intended to cause Ms Pothan to believe that, if she approved the advertisement, the advertisement would appear in a publication called Find a Business, which would be distributed in the Whangarei area in a material way (so as to be of some benefit to Kamo Home & Village);
(c) Ms Banton did not honestly believe at the time that a publication called Find a Business, with the Kamo Home & Village
185 Ms Haylock has reconciled the payment to money received by the defendants.
advertisement, would be distributed in the Whangarei area in any meaningful way.
[289] I also provide one example that the charge is proven against Mr Middeldorp. On 12 June 2012 an email was sent to Plimmerton School of Dance in Plimmerton. The metadata recorded that it came from “Middeldorp … Sent Items”. The associated fax proof, with the advertisement for the Plimmerton School of Dance, was for a price of $395 plus GST. The email was as follows:
Hello Natalie
Following on from today’s phone call here is the Proof for the “Find a
Business” as discussed.
If no corrections are required, please reply confirming that the artwork is cleared to proceed for printing.
If there are errors to the artproof, please let us know as soon as possible. Thank you for your support
Regards
Peter Carol
Art Room
[290] Natalie Ainsworth gave evidence. She could not remember receiving the email but that that she could recall a telephone conversation with the representative. She could not be sure, but thought that she would have asked about the distribution location because if it was not in her catchment area, she would not have been interested. The advertisement had RAD (TCP) on it, indicating the Royal Academy of Dancing syllabus and that the teacher was qualified by the Teaching Certificate Programme. She asked for that to be removed as that was no longer current (owing to becoming pregnant). She therefore sent an email on 12 June 2012 asking for this
to be removed. She paid for the advertisement on 18 June 2012.186
[291] In this example I am sure that the following is proven:
186 The payment has been reconciled to money received by the defendants.
(a) Mr Middeldorp made or caused to be made Copy 2 (the fax proof on the template), Copy 3 (the sending email attaching the fax proof), and Copy 4 (the receiving email with the attached fax proof);
(b)Mr Middeldorp intended to cause Ms Ainsworth to believe that, if she approved the advertisement, the advertisement would appear in a publication called Find a Business, which would be distributed in a material way in the Plimmerton area;
(c) Mr Middeldorp did not honestly believe at the time that a publication called Find a Business, with the Plimmerton School of Dance advertisement, would be distributed in the Plimmerton area in any meaningful way.
[292] Mr Woolford’s analysis, as summarised in the schedule provided for this publication, has identified that, of the 191 fax proofs, 52 were sent under the Peter Carol/Peter Carrol alias, one was sent under the Anna Rowe alias, eight were sent under the Tracy Dawson alias, 14 were sent under the Anna Dawson alias, and the balance (116 fax proofs) were sent under the Anna Thomas alias. The analysis has not identified in respect of every particular whether the person who made the call was also the person who made the fax proof and/or sent the email. As with the other publications, it is likely that in some instances one defendant helped the other, and where that occurred it must have been with the relevant intent.
[293] I am therefore sure that Ms Banton either committed the actus reus of this charge or helped or encouraged Mr Middeldorp to do so on at least 139 occasions (being the 139 particulars where her aliases were used). I am also sure that Mr Middeldorp either committed the actus reus of this charge or helped or encouraged Ms Banton to do so on at least 52 occasions (being the particulars where his alias was used). On each occasion they did so with the relevant intent.
[294] It is not necessary to establish the precise number of occasions where each defendant was involved to prove the charge. Subject to any submissions that may be made at sentencing, I do not regard the number of sales calls or emails one defendant
may have been involved in, as against the number made by the other defendant, as necessarily reflecting the difference in their respective culpability.
Find a Business: alternate charge 27
[295] No verdict is necessary on this charge in view of my verdict on charge 27A.
The NZ Fire Fighter: charge 33A
[296] The charge is that:
… Johannes Hendrik Maria Middeldorp and Noelene Kay Banton on or about 16 October 2012 at Wellington or elsewhere in New Zealand, with intent to cause loss to other persons, did make documents that were, in part, a reproduction of other documents, namely “fax proof” documents that were in part reproductions of other documents.
Particulars: Purported magazine entitled “The NZ Fire Fighter”.
1. The accused helped, encouraged, made, or caused to be made, “fax proof” documents purporting to be an offer for inclusion of an advertisement in a legitimate magazine publication with intent to cause loss to any other person;
2. A fax proof is a document that in part reproduces another document;
3. A fax proof is made with intent to cause loss to any person;
4. A fax proof purports to be associated with a legitimate magazine publication;
5. The details surrounding the publication and circulation of the magazine are false;
6. Fax proofs may form part of a contract with a person obtained by deception for advertising services and publication in the fraudulent magazine;
7. Fax proofs were made in connection with the promotion of the fraudulent publication of the magazine entitled The NZ Fire Fighter; and
8. The schedule annexed to the indictment marked 33 records the details of fax proof documents which are reproductions.
[297] The schedule marked 33 annexed to the indictment contains one item (that is, particular) for this charge, which corresponds to one fax proof. The charge is proven against a defendant if that particular is proven against that defendant, whether as the
person who made or caused to be made the relevant document, or because they helped or encouraged the other defendant to do so.
[298] The fax proof template that relates to this charge was headed as follows:
[299] Mr Woolford’s analysis identified one fax proof using this template that was sent to a prospective client on 16 October 2012. It was sent to the Whangaparoa Golf Club under the Graham alias. The fax proof was for a price of $240 plus GST. It was not reconciled to any payment received by the defendants and there is no evidence that the publication was printed. The fax proof was sent with an email. The metadata for that email records that it was located in the folder “Middeldorp … Sent Items.” That email was in these terms:
Hi Paul
As per phone call here is the artwork for this year’s Fire Fighter.
If you wish make Changes please let us know immediately, otherwise please reply saying all is Correct to print.
Kind Regards
Graham
[300] The evidence established that there was one other fax proof sent with this template which was not included as a particular to this charge. This was sent to Trevor Ashman Roofing Consultants also on 16 October 2012. Graham is also the alias used on this fax proof. Trevor Ashman noted on the fax proof that he had no record of this and was retiring so it was to be cancelled. There is no evidence of further sales after 16 October 2012. The defendants were arrested on 24 October
2012.
[301] There is no evidence of any specific representations being made to the Whangaparoa Golf Club. However there is nothing which sets this magazine apart from the others. The title for the magazine is a “bleat” one. An alias was used. One “bunny” was targeted at the outset. The two victims were geographically apart, in Whangaparoa and New Plymouth. As discussed earlier, I am sure that, apart from possibly The Local Wall Calendar, the defendants did not intend to publish any of the other magazines. There is no reason to reach any other view about this magazine.
[302] I am therefore sure that Mr Middeldorp made or caused to be made a document that was a reproduction of another document (Copies 2, 3 and 4 relating to Whangaparoa Golf Club) and that he did so intending to cause loss to the Whangaparoa Golf Club. I am not sure that Ms Banton was directly involved in this fax proof nor that she helped or encouraged Mr Middeldorp to do so. I am not aware of evidence that directly links her to this publication or any fax proofs sold in relation to it. This publication is not included in the “Yes” book, nor the “work book”. I am therefore not sure that the charge is proved against her.
The NZ Fire Fighter: alternate charge 33
[303] It is not necessary to give a verdict on this charge for Mr Middeldorp. For the same reason that I am not sure that Ms Banton is guilty of charge 33A, I am not sure that she is guilty of charge 33.
Verdicts
[304] In relation to Mr Middeldorp, I find him:
(a) guilty on counts 25A, 26A, 27A, 29A, 31A, 33A and 34A (with verdicts therefore not required on counts 25, 26, 27, 29, 31, 33 and
34);
(b) not guilty on count 28A and the alternative count 28; (c) not guilty on count 32A and the alternative count 32.
[305] In relation to Ms Banton, I find her:
(a) guilty on counts 25A, 26A, 27A, 28A, 29A, 31A, and 34A (with verdicts therefore not required on counts 25, 26, 27, 28, 29, 31, and
34);
(b) not guilty on count 32A and the alternative count 32; (c) not guilty on count 33A and the alternative count 33.
Mallon J
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