R v Reid

Case [2007] NZSC 90 14 November 2007

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IN THE SUPREME COURT OF NEW ZEALAND
SC 95/2006
SC 3/2007
SC 4/2007
SC 7/2007
[2007] NZSC 90
JOHN ANTHONY REID
PETER WILLIAM RUSSEL
PETER MICHAEL CONNOLLY
JOHN DAVID CURRIE
v
THE QUEEN
Hearing:10 and 11 October 2007

Court:Elias CJ, Blanchard, Tipping, McGrath and Anderson JJ
Counsel:C T Walker and N C Z Khouri for Mr Reid

J R Billington QC for Mr Russel
H Fulton for Mr Connolly
No appearance for Mr Currie
J A Farmer QC and M J Ruffin for Crown

Judgment:14 November 2007

JUDGMENT OF THE COURT

A All appeals are allowed.
B The costs orders made in the High Court are reinstated.
CEach appellant is to have costs in the Court of Appeal of $12,000 together with reasonable expenses as may be fixed, if necessary, by the Registrar of that Court.
DIn this Court Mr Reid, Mr Russel and Mr Connolly are each to have costs of $20,000 together with reasonable expenses as may be fixed, if necessary, by the Registrar of this Court. Mr Currie is also entitled to reasonable expenses as may be fixed, if necessary, by the Registrar of this Court.

REASONS
(Given by Anderson J)
[1] This appeal is concerned with awards under the Costs in Criminal Cases Act 1967 to four acquitted defendants.
[2]       In September and October 2004 the appellants were tried on indictment by Fogarty J on two counts of conspiracy to defraud[1] and, in the case of Mr Currie, Mr Reid and Mr Russel, various counts of money laundering.[2]   The charges related to a tax avoidance scheme involving the purchase of shares by investors using loss attributing qualifying companies, with the bulk of the price deferred for ten years and hedged with a loss of profit insurance policy. The premium for the policy was to be paid by way of a relatively small cash payment and a loan for the balance. That loan was borrowed on an interest bearing but non-recourse basis, on the security of an assignment of the borrower’s rights to complete the share purchase together with the benefit of the insurance policy. These arrangements meant that if, at the end of the ten year period, the share value should be less than the accrued debt, the purchaser could walk away without any personal liability.
[1]     Then, s 257 of the Crimes Act 1961.
[2]     Then, ss 257A(2) and 66 of the Crimes Act 1961.
[3]       Plainly, the purpose of those arrangements was to incur a loss in respect of the insurance premium in the optimistic expectation that it could be immediately offset against the investor’s taxable income. But the Serious Fraud Office saw the promoters of the scheme not as merely facilitating tax avoidance, but as fraudsters. Their alleged criminality was conspiring to defraud the investors and, consequentially, the Commissioner of Inland Revenue as well. The basis upon which the Crown case was put is discussed later in this judgment. The money laundering…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v Reid

Details

AGLC: R v Reid [2007] NZSC 90
Case: [2007] NZSC 90
Decision Date: 14 November 2007

CaseChat Overview and Summary

The Supreme Court of New Zealand dealt with an appeal concerning the awarding of costs to four acquitted defendants in the case of R v Reid. The appellants were acquitted of conspiracy to defraud and, in some cases, money laundering charges related to a tax avoidance scheme. Despite their acquittals, the appellants applied for costs under the Costs in Criminal Cases Act 1967 due to the significant expenses incurred in their defense. The High Court judge had awarded varying degrees of costs to the appellants, but the Court of Appeal set aside these orders. The appellants sought further review by the Supreme Court.

The central legal issue before the Supreme Court was whether the Court of Appeal had correctly exercised its discretion in setting aside the costs orders awarded by the High Court. The Court had to determine if the trial judge had erred in principle when he awarded costs and whether the Court of Appeal was justified in modifying those awards.

The Supreme Court found that the Court of Appeal had erred in its assessment. The trial judge's method of evaluating the Crown's case by dividing it into three limbs was a legitimate approach to applying the statutory criteria for awarding costs. The Court of Appeal incorrectly believed that the trial judge had shifted his focus from the justification of the prosecution to the possibility of proving the charges on each theory. Additionally, the Supreme Court held that the fiscal concerns raised by the Court of Appeal about the impact of costs awards on the prosecutorial function were unfounded, as the Act provides for such costs to be paid by the Crown from a neutral source.

Consequently, the Supreme Court allowed all appeals, reinstated the costs orders made by the High Court, and directed that each appellant be awarded costs in the Court of Appeal and in the Supreme Court. Mr Currie, who was not represented but made written submissions, was also entitled to his reasonable expenses. The Court emphasized that the acquittals precluded any challenge to the costs orders based on the strength of the Crown's case.

Orders