Hearing:
12, 13, 17, 18, 19, 21, 24, 25, 26, 27, 31 March 2014

1, 2, 3, 4, 7, 8, 9, 14, 15, 16, 28, 29, 30 April 2014
1, 2, 5, 6, 7, 8, 9, 13, 14, 15, 22, 26, 27, 28, 29, 30 May 2014
3, 4, 5, 6, 10, 11, 12, 17, 18, 19, 20, 24, 25, 26, 27 and
30 June 2014
21, 23, 24, 28, 30 July 2014
5, 6, 7, 8, 12, 13, 14, 15, 16 and 18 August 2014

Counsel:

C R Carruthers QC, N F Flanagan, P W Gardyne and
E Rutherford for Crown
P H B Hall QC, M A Corlett and K H Cook for Mr Sullivan
R B Squire QC for Mr White
J H M Eaton QC for Mr McLeod

Verdicts:

14 October 2014

Reasons:

14 October 2014

REASONS FOR VERDICTS OF HEATH J

Solicitors:
Serious Fraud Office, PO Box 7124, Wellesley Street, Auckland
Meredith Connell, PO Box 2213, Auckland
Gresson Dorman & Co, PO Box 244, Timaru
Rhodes & Co, PO Box 13444, Armagh, Christchurch
Duncan Cotterill, PO Box 5, Christchurch
Counsel:
C R Carruthers QC, PO Box 305, Wellington P H B Hall QC, PO Box 3750, Christchurch R B Squire QC, PO Box 10157, Wellington
J H M Eaton QC, PO Box 13868, Armagh, Christchurch
M A Corlett, PO Box 4338, Shortland Street, Auckland

R v SULLIVAN [2014] NZHC 2501 [14 October 2014]

Contents

1. Verdicts [1]

2. Structure of reasons [8]

3. Reasons for verdicts – legal requirements [12]

4.
South Canterbury’s business environment: 2004–2010

(a)      A culture of concealment?

[15]

(b)      Rapid growth: 2004 – mid 2008 [18]

(c)       Effect of financial crises: mid 2008–2010 [23]

5.
Governance and management

(a)      Introduction

[26]

(b)      Board dynamics [27]

(c)       Mr Hubbard’s role [46]

(d)      Accounting systems [52]

(e)       Loan authorities [59]

(f)       Related party lending [64]

(g)      Delegations from directors to management [81]

(h)      “Knowledge” of prospectuses and financial statements [85]

6. The Trust Deed [99]

7.
The Guarantee Scheme

(a)      The reasons for the Guarantee Scheme

[108]

(b)      South Canterbury’s application to enter the Scheme [117]

(c)       South Canterbury’s processes [128]

(d)      An attempt to amend the Guarantee Deed [138]

(e)       The final form of the Guarantee Deed [140]

8.
The transactions

(a)      The Shark transactions

(i)       Shark 1 [143]

(ii)      Shark 2 [164]

(b)      The Woolpak transaction [179]

(c)      The Hyatt transactions

(i)       Introductory comments [220]

(ii)      The Hilltop transaction [226]

(iii)     The Quadrant transaction [277]

(d)      The Dairy Holdings transaction [297]

(e)       The Kelt transaction [314]

9. The $150 million banking facility [355]

10. Debt impairment [358]

11. The financial reporting environment [362]

12.
The indictment and its particulars

(a)      The form of the indictment

[373]

(b)      The prospectus charges: Counts 1–5 [378]

(c)       The “theft” charges: Counts 6–8 [387]

(d)      The…

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 Sullivan

Details

AGLC: R v Sullivan [2014] NZHC 2501
Case: [2014] NZHC 2501
Decision Date: 14 October 2014

CaseChat Overview and Summary

The case of R v Sullivan involved a trial of three defendants, Edward Oral Sullivan, Robert Alexander White, and Lachie John McLeod, charged with offences arising from their participation in the management and affairs of South Canterbury Finance Ltd, a finance company that went into receivership in August 2010. The offending is alleged to have occurred between 18 November 2004 and 9 February 2010. The Crown's case was primarily based on a consistent failure to disclose the true extent of related party lending between 2004 and 2010, involving seven transactions. The court found Mr Sullivan guilty on count 5 of the indictment, which involved material omissions in Prospectus 60 that Mr Sullivan knew ought to have been disclosed. Specifically, the court found particulars relating to the Woolpak, Quadrant, and Kelt transactions proved beyond reasonable doubt. However, the court did not find proved beyond reasonable doubt the particulars relating to the Dairy Holdings transaction and debt impairment. The other two defendants, Mr White and Mr McLeod, were found not guilty on all counts.

Orders