R v Morris CA405/05

[2006] NZCA 460

ORDER PROHIBITING PUBLICATION OF THE JUDGMENT AND ANY PART OF THE PROCEEDINGS (EXCEPT THE RESULT AS SET OUT IN THE JUDGMENT OF THE COURT) IN NEWS MEDIA OR ON INTERNET OR OTHER PUBLICLY AVAILABLE DATABASE UNTIL FINAL DISPOSITION OF RETRIAL.

PUBLICATION IN LAW REPORT OR LAW DIGEST PERMITTED.

IN THE COURT OF APPEAL OF NEW ZEALAND

CA405/05

THE QUEEN

v

CHRISTOPHER CLIFF MORRIS

Hearing:         18 May 2006

Court:            O’Regan, Panckhurst and Potter JJ

Counsel:         C R Carruthers QC and D A Ewen for Appellant

C L Mander for Crown

Judgment:      3 October 2006         at 11 am

JUDGMENT OF THE COURT

A        The appeal is allowed and the convictions are quashed. B A retrial is ordered.

C        The appellant’s  bail  is  continued  on  the  basis  set  out  at  [56]  of  the

Reasons of the Court.

R V CHRISTOPHER CLIFF MORRIS CA CA405/05  3 October 2006

DOrder prohibiting publication of the judgment and any part of the proceedings (except the result as set out in the Judgment of the Court) in news media or on Internet or other publicly available database until final disposition of retrial.   Publication in Law Report or Law Digest permitted.

REASONS OF THE COURT

(Given by Potter J)

Introduction

[1]      The  appellant  Christopher  Cliff  Morris  was  found  guilty  following  trial before Judge D R W Barry and a jury in the District Court at Wellington of 67 charges of fraudulently using a document contrary to s 229A(b) Crimes Act 1961 (repealed 2003).  He appeals against conviction.

[2]      Of the five grounds of appeal stated in the Notice of Appeal, two were abandoned.  A third was taken only to preserve the appellant’s right of appeal to the Supreme Court against the judgment of this Court dated 4 November 2004.  The fifth ground of appeal was that this Court erred in law by ordering in its judgment of

4 November 2004 a retrial under s 382 Crimes Act following determination in favour of the Crown of a case stated under s 380 Crimes Act.  Having formally raised this ground before us, counsel for the appellant accepted that this was an issue to be pursued in the Supreme Court.

[3]      The remaining ground of appeal (ground 4 in the Notice of Appeal) was stated as follows:

There was a miscarriage of justice occasioned by the Judge’s summing up on the issue of what use could be made by the jury of both the failure of the co- accused to give evidence and the failure to call the “tax-payers” on whose behalf the returns were filed.

[4]      This  ground  of  appeal,  to  which  this  judgment  relates,  thus  relies  on s 385(1)(c) Crimes Act, that there was a miscarriage of justice in the trial of the appellant.

Section 229A

[5]      Section 229A applies to any document that is capable of being used to obtain any privilege, benefit, pecuniary advantage, or valuable consideration, and provides that everyone is liable who, with intent to defraud –

(a)       …

(b)Uses  or  attempts  to  use  any  such  document  for  the  purpose  of obtaining, for himself or for any other person, any privilege, benefit, pecuniary advantage, or valuable consideration.

[6]      The essential elements of each of the charges against the appellant which the

Crown was required to prove were:

(a)That  the  tax  returns,  the  subject  of  each  of  the  counts  in  the indictment, were documents;

(b)That the documents were capable of being used to obtain pecuniary advantage;

(c)That the accused used the documents to obtain a pecuniary advantage for himself or for others;

(d)That by using the documents the accused (as principal or a party), intended to defraud the Inland Revenue Department.

[7]      It was the Crown’s case at trial that the appellant between June 1999 and April 2000 fraudulently filed 13 tax returns claiming refunds in the name of his brother Michael Morris and another person by the name of D G Sykes.   The tax returns were filed manually using a paper IR3 form.  They related to the tax years ended 31 March 1991 through to 1999.   They claimed refunds ranging from approximately $6,300 to approximately $51,800 (Counts 1-13).

[8]      In relation to Counts 14-67 it was the Crown’s case that, with the assistance of Mr James Heald, the appellant established a tax agency in the name of Tax Easy Limited in March 2001.   Between July 2001 and November 2001, 54 tax returns were fraudulently filed electronically with the Inland Revenue Department in the names of Michael Morris, D G Sykes and ten other taxpayers.   These tax returns claimed refunds of significant amounts, on a generally increasing scale.  They related to the tax years from 1997 through to 2001.  Mr Heald pleaded guilty to five counts of using a document and one count of conspiracy and was sentenced to three years imprisonment.  When sentencing the appellant Judge Barry described Mr Heald as “a minor figure” in the offending.

[9]      Each of the 67 tax returns the subject of charges claimed tax refunds on the basis that the tax payable by the taxpayer for the relevant tax year was lower than the amount of tax withheld and paid to the Inland Revenue Department by the entity for whom the taxpayer was said to have worked as an employee or contractor.   The entities named as having deducted the withholding tax were either Richmond Pacific Leathers (unincorporated) or CA Systems Ltd (we will call them employers, for ease of reference).  IRD numbers stated for the employers in the tax returns were found to correspond respectively to Richmond Ltd and Essen Ltd in the records of the Inland Revenue Department.

[10]     Approximately $2.8m was claimed by way of refunds due in respect of the named taxpayers, with the Commissioner of Inland Revenue paying out some $1.5m before the fraud was discovered in early October 2001.

[11]     The refunds paid out in the names of Michael Morris and D G Sykes were direct credited into a bank account established by the appellant in the name of his brother M W Morris.  The refunds paid out in the names of the other taxpayers were direct credited to a bank account in the name of the tax agency, Tax Easy Limited, opened by the appellant.   The funds credited to these bank accounts were subsequently transferred to a range of bank accounts with and under the control of the appellant or exhausted as a result of large cash withdrawals made from automatic teller machines.

[12]     The Crown’s case was circumstantial.  It set out to show the establishment of a fraudulent operation by the appellant and (also involving Mr Heald) whereby large sums of money were dishonestly obtained from the Inland Revenue Department. Features   of   the   appellant’s   operation   alleged   by   the   Crown   included   the impersonation of his brother, Michael Morris, the obvious pattern of the repeated fraudulent tax returns and the channelling of the moneys obtained by way of refund to accounts from which the appellant could access the funds so generated.  It was the Crown’s case that the repetition, size and chronology of the claims made by the appellant was highly probative of an escalating pattern of fraudulent conduct.

Appellant’s submissions

[13]     The appellant’s submissions to this Court focused (as did the defence case put to the jury at trial), on the failure of the Crown to call direct evidence of the taxpayers and the employers Richmond Limited and Essen Limited, and on the reception in evidence of alleged “assertions” by Mr Michael McBride, a tax investigator who gave evidence for the Crown concerning the information contained in the tax returns.  It was contended that much of his evidence was inadmissible as double documentary hearsay and that the trial Judge did not properly direct the jury as to the use they could properly make of it.  This challenge to the admissibility of the evidence was raised in submissions in this court but not in the notice of appeal. It was not raised directly in the District Court but was an aspect of the submission made on the appellant's behalf in the course of the appellant's s 347 application, made at the conclusion of the Crown case.

(a)Whether the taxpayers were engaged as contractors by the companies Richmond  Limited and  Essen  Limited,  whose  IRD  numbers  were entered in the tax returns filed, they being entered respectively as Richmond Pacific Leathers and Essen Limited in the tax returns.  The Crown carried the burden of proving that the contractors were not so engaged by Richmond Limited or Essen Limited;

(b)       Whether resident withholding tax was paid by the taxpayers.   The

Crown carried the burden of proving that it was not.

[15]     Mr Carruthers said that the only evidence adduced by the Crown on these matters was that given by Mr McBride, and his evidence was only that the taxpayers’ names did not appear in the Inland Revenue Department records held in respect of the  entities  Richmond  Limited  and  Essen  Limited.    But,  it  was  submitted,  the evidence of Mr McBride did not establish that the taxpayers were not contractors of those companies.  Nor did Mr McBride give evidence that the resident withholding tax was not paid for the taxpayers.

[16]     Further, it was submitted, the Crown was required to exclude CA Systems Limited and Richmond Pacific Leathers as being legitimate employers of the taxpayers.  It was available to the Crown to call evidence to establish these matters, for example by production of business records for Richmond Limited and Essen Limited, or by calling an officer or employee from those companies, but this was not done.   Nor was there any evidence of connection (or lack of connection) between Richmond Limited and Richmond Pacific Leathers on the one hand and Essen Limited and CA Systems Limited on the other hand.

[17]     It was submitted that the prosecution case depended on drawing inferences from Inland Revenue Department records on the basis of Mr McBride’s evidence as to what those records disclosed, but that was to assume the accuracy of the Inland Revenue Department records, which the evidence did not establish.

[18]     It  was  then  submitted  that  given  the  state  of  the  evidence,  the  Judge’s summing up did not properly direct the jury as to the use that could properly be made of the evidence.

[19]     It was further submitted that because of the presumption in s 34 of the Tax Administration Act 1994 it was required of the Judge to state that in the absence of evidence from the taxpayers themselves and from Mr Heald, the jury must assume the returns were “proper” unless and until the Crown disproved them beyond a reasonable doubt.

[20]     Mr Carruthers concluded his submissions by reverting to what he said were the crucial questions:

•   Why were the taxpayers not called to give evidence?

•    Why were representatives from Richmond Limited and Essen Limited not called to give evidence?

Without that evidence, he submitted, the Crown could not and had not proved the charges against the accused.  The admission of Mr McBride’s hearsay evidence and the failure of the Judge to properly direct on the s 34 presumption resulted in a material misdirection on the central issue of the trial.

Crown’s submissions

[21]     Mr Mander  for the Crown  referred  to  the substantial  circumstantial  case presented by the prosecution which set out to show the establishment of a fraudulent operation by the appellant and Mr Heald whereby large sums of money were dishonestly obtained from Inland Revenue Department and that the repetition, size and chronology of the claims detailed in evidence was highly probative of an escalating pattern of fraudulent conduct.  It was submitted that the Judge correctly directed the jury as to the essential element of dishonest intent which the Crown was required to prove.

[22]     In relation to the evidence of Mr McBride the Crown submitted that he did not, as submitted for the appellant, make “assertions that the information contained in the returns filed was false”.   Mr McBride, an officer of the Inland Revenue Department for some 46 years and an investigator with the Department for 18 years, gave evidence about his investigation of the tax agency called Tax Easy Limited which he commenced on 30 November 2001.

[23]     He gave evidence of the Department’s system for processing returns and being able to cross-reference the details contained in the returns claiming refunds, with other records required to be filed with the Department and to which he had access in his capacity as an officer of the Department.  It was his evidence that the outcome of his attempt to cross-reference the deductions at source claimed in the tax returns with departmental records in respect of the employers’ tax numbers as provided in the tax returns, was that no record could be found in any case of either the  taxpayer  having been  employed  or  engaged  by the  employer  with  the  IRD number, or of such deductions having been made.

[24]     The probative weight of Mr McBride’s evidence, it was submitted for the Crown, was the absence of any such record in respect of all the electronically filed returns filed by Tax Easy Limited and all the hard copy returns completed by the appellant in the name of M W Morris and D G Sykes.

[25]     It was submitted that the absence of the Department having any record of this type  in  respect  of  all  67  returns  the  subject  of  the  charges,  was  significantly probative of fraudulent conduct having regard to the pattern of multiple returns claiming very large refunds received by Inland Revenue Department in respect of certain taxpayers over a relatively short period of time.  Mr Mander observed that Mr McBride’s  evidence  as  to  the  absence  of  any  documentary  record  was  one circumstance in a large circumstantial case upon which the Crown could rely.

[26]     Mr Mander accepted that there were limitations in the evidence adduced by the  Crown,  including  that  representatives  from  Richmond  Limited  and  Essen Limited were not called, but submitted that the Judge fairly put to the jury the defence criticisms of the Crown case in his summing up and properly directed them

in relation to matters of weight.  Thus, weaknesses and limitations in the Crown’s case  were  fairly before  the  jury.    He  said  that  this  was  simply  a  factor  to  be considered by the jury along with all the other evidence in a broad circumstantial case, which the Crown submitted, established overwhelmingly the fraudulent intent of the appellant.

[27]     In relation to the presumption in s 34 of the Tax Administration Act the Crown submitted that the presumption adds nothing to the burden that the Crown carries in a criminal prosecution to prove the elements of the offence beyond reasonable doubt.  It was submitted that if the Crown is able to discharge the onus of proving the appellant acted fraudulently in using the tax returns, the presumption contained in s 34 is rendered redundant and is also satisfied.

Discussion

[28]     Essential to proof of the Crown’s case at trial was that the Crown established:

•   The documents (tax returns) were false; and

•   The appellant used the false documents with intent to defraud the Inland Revenue

Department.

[29] To prove the first of these fundamental planks in its case, the Crown relied on the evidence of the tax investigator, Mr McBride, the essence of which is set out in [23].

[30]     Objection to Mr McBride giving evidence had been taken by the defence under s 81 of the Tax Amendment Act 1994 at an earlier trial before Judge Gaskell, the outcome of which was a directed verdict, a case stated, and this Court’s judgment of  4  November  2004  in  favour  of  the  Crown.    This  Court  held  that  provided Mr McBride’s evidence was admissible under the general law, he would not be prevented by s 81(1) from giving that evidence.  A new trial was directed.

[31]     As  noted  at  [13]  above,  a  ruling  as  to  the  general  admissibility  of Mr McBride’s evidence was not sought pre-trial nor during the trials before Judge Gaskell or Judge Barry.

[32] Mr McBride was the first Crown witness in the new trial before Judge Barry and a jury. Mr Ewen, second counsel for the appellant at that trial and before us, raised a formal objection to the evidence but stated that no ruling was required. We assume the formal objection was taken to preserve the appellant’s right of appeal on the two issues referred to in [2]. Mr McBride then proceeded to give evidence without issue being taken regarding its admissibility.

[33]     At the conclusion of the Crown’s case the defence made application under s 347 Crimes Act.  On 12 August 2005, the day following the close of the Crown’s case, Judge Barry heard submissions from counsel and dismissed the application.  It appears from the Judge’s written decision that the arguments for the appellant presented to the Judge included those addressed to us, together with other grounds not  pursued  on  this  appeal.    On  the  question  of  the  general  admissibility  of Mr McBride’s  evidence  to  prove  the  falsity  of  the  tax  returns,  the  Judge  was persuaded that because the evidence was simply that the employer tax records did not contain evidence about the taxpayers concerned, it did not offend the best evidence rule and was relevant and admissible.   He considered the absence of evidence from officers of Richmond Ltd and Essen Ltd may be a matter for submission about weight but “does not derogate from its admissibility” (at [25]).

[34]     Judge Barry made no reference in his decision to authorities on the question of admissibility in the context of Mr McBride’s evidence, and because only one case was cited to us, it can be inferred that the Judge had no or little assistance in this respect.

[35]     Before  this  Court,  the  Crown  relied  on  R  v  Shone  76  Cr  App  R  72. Mr Carruthers submitted that Shone has no application in the circumstances of this case.   Neither counsel was able to refer us to any other authority, but our own researches have been of assistance.

[36]     There is mixed authority in other jurisdictions regarding the way in which it can be proved that a certain thing did not occur, on the basis that it is not noted in the appropriate records.   The leading authority on records and hearsay in England is Myers v DPP [1965] AC 1001 where it was said that evidence of record keeping, adduced to prove that a car was not the car the defendant claimed it was, due to the cylinder block number, was hearsay evidence. The evidence was being put before the jury to show that the records were correct and was therefore inadmissible hearsay (although the evidence was nonetheless admitted via a statutory exception for weighty evidence). Lord Reid at page 1022 said:

They [the records] only tend to prove that a particular car bore a particular number when it was assembled if the jury were entitled to infer that the entries were accurate, at least in the main; and the entries on the cards were assertions by the unidentifiable men who made them that they had entered numbers which they had seen on the cars.

[37]     Myers was followed in R v Patel [1981] 3 All ER 94 where it was held that evidence suggesting that the absence of a man’s name from a government list of legal immigrants meant that he was an illegal immigrant was inadmissible.

[38]     Shone, the case cited by the  Crown,  does  not  follow  Myers.    In  Shone, evidence was given to the effect that because there was no record of the vehicle springs in question being recorded as sold, they had not in fact been sold.  This gave rise to the inference that the defendant had been handling stolen goods.   Shone differs from this case, in that there the record in question was produced, and for that reason we accept Mr Carruthers’ submission that it is not applicable here.   In any event, Shone has been subject to some compelling criticism both in Phipson on Evidence at 25-18 and the Australian edition of Cross at [31145]. Phipson says that the approach in Shone:

Amounts to saying that the system was itself a form of circumstantial evidence, and that the document was able to give information without their [sic] being a statement by anyone.

A similar result to Shone was reached in South Africa in S v Becker [1968] 1 SA 18 (CPD) which has also been the subject of criticism.

[39]     In both Australia and Canada, the position is that evidence of this kind is hearsay and inadmissible.   In R v Gould 78 Cr (3d) 151, Wood JA noted that the witness could not testify as to what the records did contain for the truth of their contents, and if he could not do that, then he also could not testify as to what the records contained to show what they did not contain.  In Australia in Commissioner for Motor Transport v Collier-Moat (1960) 60 SR (NSW) 238 (FC), it was said that when a record of a permit was generally created on the issuance of a permit, searching a system of records and not finding any such record was not admissible to prove that no permit had in fact issued.

[40]     In our opinion, the Canadian and Australian approach is the correct one.  It is as much hearsay evidence to say that a certain piece of information was not in a set of records, as to say it was.  It implies a negative statement by the person who made the record and that person is not giving evidence.  The Crown’s argument that the evidence here is circumstantial does not assist.   The rule against hearsay evidence applies to all evidence, circumstantial and direct.

[41]     Here Mr McBride gave evidence that the records he searched did not include the relevant taxpayers’ names.   This cannot be distinguished from a situation in which he gave evidence as to what the records did contain.  Since Mr McBride did not himself prepare the records, both are hearsay if tendered for the truth of their contents.  The evidence of Mr McBride upon which the Crown relied to establish the first fundamental plank of its case, that the tax returns were false, carries the very risks that underpin the rule against hearsay evidence.  Reliance on this aspect of his evidence presupposes important facts, including:

•    that the information filed by Richmond Ltd and Essen Ltd was accurate and complete;

•    that  the  Inland  Revenue  Department  records  Mr  McBride  searched  were accurately and properly compiled.

[42]     Mr McBride could not testify to these matters, and because representatives from Richmond Ltd and Essen Ltd were not called and there was no evidence from

the makers of the relevant Inland Revenue Department records, it was not possible to test these facts in cross-examination.

[43]     These defects go not just to weight, but to admissibility of the evidence.  In reality,  the  Crown  was  saying  to  the  jury  that  they  could  and  should  accept Mr McBride’s testimony as direct (not circumstantial) evidence that these taxpayers were not engaged by Richmond Ltd and Essen Ltd, and that these taxpayers did not pay the resident withholding tax claimed in the tax returns.

Conclusions

[44]     We conclude that the evidence of Mr McBride in relation to the Department’s records was hearsay and inadmissible.  His evidence was crucial to proving the facts upon which the Crown case was founded, the falsity of the tax returns.

[45]     Proof of the second fundamental plank, fraudulent intent, will invariably be dependent on circumstantial evidence.   In this case the circumstantial evidence of fraudulent intent was overwhelming.   But without proof of the falsity of the documents (tax  returns), the charges  against  the  appellant  could  not  be  proved. Mr McBride’s evidence about the Department’s records was before the jury on the basis that it was capable of proving this element.  We have now found it was not admissible.  That means the verdict of the jury cannot be regarded as safe: there has been a miscarriage of justice in terms of s 385(1)(c) of the Crimes Act.  We therefore allow the appeal.

[46]     Given this finding, it is unnecessary that we consider the other matters raised in submissions.

Retrial

[47]     Counsel were requested to file memoranda concerning the appropriateness, or not,  of  directing a  retrial.    That  course  was  taken  on  account  of  the  particular circumstances of this case.   On the one hand there was circumstantial evidence,

which we have characterised as overwhelming, indicating that the appellant was the author of a patently fraudulent scheme.  On the other hand, there was an absence of direct evidence to establish that the “taxpayers” were not employed by the two relevant companies and that they did not pay withholding tax to IRD.

[48]     Against this background Mr Mander for the Crown sought an order for retrial on the basis of the scale and seriousness of the fraud, the general strength of the Crown case and the public interest in the question of the appellant’s guilt being determined by the verdict of a jury, rather than through a legal defect in the presentation of evidence.

[49]     By contrast, Mr Carruthers by reference to Reid v R [1980] AC 343 (PC) at

348 submitted that an order for a retrial was inappropriate:

It would conflict with the basic principle that in every criminal trial it is for the prosecution to prove its case against the defendant, if a new trial were ordered in cases where at the original trial the evidence which the prosecution had chosen to adduce was insufficient to justify a conviction by any reasonable jury which had been properly directed. In such a case whether or not the jury’s verdict of guilty was induced by some  misdirection  of the  judge  at  the  trial  is  immaterial;    the governing reason why the verdict must be set aside is because the prosecution having chosen to bring the defendant to trial had failed to adduce sufficient evidence to justify convicting him of the offence with which he has been charged.  To order a new trial would be to give the prosecution a second chance to make good the evidential deficiencies in its case – and, if a second chance, why not a third?  To do so would, in their Lordships’ view, amount to an error of principle in the exercise of  the  power  [to  direct  a  judgment  and  verdict  of acquittal or order a new trial].

[50]     Mr Carruthers argued that, if the Department cannot rely on the evidence of Mr McBride to prove the falsity of the returns, the appeal should be allowed on the basis that the verdict of the jury was unreasonable or could not be supported having regard to the evidence (s 385(1)(a) of the Crimes Act), rather than on the grounds of a miscarriage (s 385(1)(c)).

[51]     In order to evaluate that submission, it is necessary to consider the admissible evidence which was before the jury which would support the Crown case that the tax returns were false.  This evidence included:

(a)“Certificates of Earnings” purportedly issued by Richmond Leathers and CA Central Systems (Essen) which were located on a floppy disc found  in  a  computer  which  was  seized  by  the  police  from  the residence of Mr Heald.   It was open to the jury to infer that these certificates were created on Mr Heald’s computer and therefore false. There was evidence which linked Mr Heald to the overall scheme including his possession of a key to the flat rented by Mr Morris using the name of Michael Morris which was the Wellington base for Tax Easy Limited.  The evidence was that the certificates of earnings (and of expenses and depreciation figures) related to counts 1-8 and 10-13 all of which were counts based upon filing of hard copy IR3 returns;

(b)The evidence of the handwriting expert, Ms James, that the IR3 tax returns in the name of Michael Morris which formed the basis of counts 1-9 were completed and signed by the appellant (apart from the 1992 return, count 2, which had not been signed at all).   Her evidence in relation to the other IR3 returns (counts 10-13) was that the returns had been completed by Mr Morris or Mr Heald, but that she could not identify the person who had signed them;

(c)The evidence of an Inland Revenue Department officer, Ms Farrell in relation to counts 44-48 (e-filed returns in the name of her brother Stephen) and counts 49-53 (e-filed returns in the name of her brother Gavin).    Her  evidence  was  that  both  her  brothers  had  lived  in Australia for 20 years and had not worked in New Zealand during that period.  That provided an ample basis for an inference that the returns filed on their behalf claiming refunds for withholdings made by employers in relation to work done in New Zealand in the years 1997-

2001 were false.  That evidence is supported by the evidence of the document examiner, Ms James, who compared the signatures on the

hard copies of the e-filed tax returns retained by Tax Easy Limited in the name of both of Ms Farrell’s brothers, and said that the signatures on those documents did not follow the natural lines seen in the specimens of their genuine signatures.  She gave similar evidence in relation to the hard copies of the e-filed returns that were held in the name of three other named “taxpayers”.  The evidence before the jury was that tax agencies are required to hold hard copies of E-filed tax returns  signed  by  the  taxpayer.     That  evidence  was  given  by Mr McBride.  Although we have indicated that much of his evidence was inadmissible, that aspect of his evidence was not.

[52] When this evidence is taken in the context of the overwhelming circumstantial case of a fraudulent scheme described at [11]-[12] above, we are satisfied that this is not a case in which it would be appropriate to allow the appeal on the basis that the verdict of the jury was unreasonable or unsupported by the evidence. For the same reasons we do not accept the submission made by Mr Carruthers that this is a case in which the prosecution has adduced insufficient evidence to justify a conviction by a reasonable jury which had been properly directed, so that the comments of the Privy Council in Reid do not apply to the present case.

[53]     The case miscarried on account of the reliance placed on the evidence of Mr McBride which we find to be inadmissible.  There remained evidence sufficient to establish the falsity of the tax returns.  But, because the jury were left to consider the case on the basis that Mr McBride’s evidence was admissible, the verdicts are unsafe.  Considering the matter in the round, we determine that it is appropriate in this case to exercise our discretion to direct a new trial.

[54]     Mr  Carruthers  submitted  that  because  of  delays  in  the  proceeding  (the appellant was arrested in December 2002) a retrial should not be directed or the proceeding should be stayed.  We have taken into account the factor of delay (the appellant was arrested in December 2002), but note that the defence strategy to not take an objection to the admissibility of the evidence of Mr McBride but to raise it on the s 347 application at the close of the Crown case, while certainly available, has

led to the admissibility point being determined only after the second appeal to this Court.   In those circumstances we are not prepared to order a stay, nor are we dissuaded from ordering a new trial.

Bail

[55]     After the Court sought submissions from counsel as to whether a new trial should  be  ordered,  which  led  counsel  to  anticipate  the  appeal  being  allowed, Mr Morris applied for bail pending the delivery of this decision.  O’Regan J granted bail in a decision dated 3 August 2006 on the following conditions:

1.        That he resides at 140 Woburn Road, Lower Hutt.

2.        That he reports to the Lower Hutt police station between the hours of

4 pm and 6 pm, Mondays and Fridays.

3.That he surrenders his passport to the Registrar of the District Court at Wellington, (if not already held by the Police) and he is not to apply for  any further travel  documentation.   The  Registrar is to notify the Secretary of Internal Affairs of this condition.

[56]     In the bail decision, it was noted that the position in relation to bail after delivery of  this  judgment  would  be  addressed  in  this  judgment.    The  Court  is satisfied that Mr Morris should remain on bail in the meantime, until there has been consideration of the ongoing position pending the new trial by the District Court.  He is therefore granted bail on the terms outlined in the bail decision of O’Regan J until the date and time of the first callover of the case in the District Court, at which time he should present himself at the District Court and address any application for bail on an ongoing basis to the District Court Judge.

Result

[57]     The appeal is allowed and the convictions are quashed.  A retrial is ordered.

Solicitors:

Crown Law Office, Wellington