R v Xu

Case [2018] NZHC 779 23 April 2018

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2016-004-9302

[2018] NZHC 779

THE QUEEN

v

KANG XU GANG CHEN

ZONGLIANG JIANG

Hearing: 11,12,17 and 18 April 2018

Counsel:

T A Simmonds, K J Cooper and S E Cann for Serious Fraud Office

A M Simperingham and W Zhang for Kang Xu S N B Wimsett and S T Patia for Gang Chen

J-A Kincade and A Shendi for Zongliang Jiang

Judgment:

23 April 2018

JUDGMENT OF KATZ J

[Section 147 applications]

This judgment was delivered by me on 23 April 2018 at 3:00pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: Serious Fraud Office, Auckland
A Simperingham, Woodward Chrisp, Gisborne W Zhang, Woodward Chrisp, Gisborne

Counsel: T Simmonds, Barrister, Auckland
S Cann, Barrister, Auckland
S N B Wimsett, Barrister, Auckland
S T Patia, Samuel Wimsett Barrister, Auckland J-A Kincade, Blackstone Chambers, Auckland A Shendi, Barrister, Auckland

R v XU [2018] NZHC 779 [23 April 2018]

Table of Contents

Introduction.......................................................................................................... [1]

Dismissing a charge — the law........................................................................... [5]

The Crown case.................................................................................................. [10]

Factual allegations [10]

The nature of circumstantial evidence [20]

Does the offence of obtaining by deception require proof that the

defendant personally incurred a debt or liability?.......................................... [24]

Section 240 — Obtaining by deception [26]

The competing interpretations of s 240(1)(b) [30]

The legislative history of s 240(1)(b) [35]

What is the correct interpretation of s 240(1)(b)? [47]

Does the required causative link between the deception and the

obtaining of credit have to be proved by direct evidence?............................. [59]

Were some lending decisions made by a computer?....................................... [66]

Does the Crown have to prove that there was no intention to
repay the loans?................................................................................................. [78]

Is there sufficient evidence to support the Crown contention that
Mr Huang or LV Park were the “true borrowers”?....................................... [85]

Ms Xu’s dismissal application........................................................................... [90]

Mr Chen’s dismissal application....................................................................... [96]

Mr Jiang’s dismissal application...................................................................... [98]

Result................................................................................................................ [104]

Introduction

[1] Kang Xu, Gang Chen and Zongliang Jiang are currently on trial in respect of various charges arising out of what the Crown alleges was large-scale mortgage fraud involving 57 loan applications that were (with one exception) made to either the Bank of New Zealand (“BNZ”) or ANZ Bank New Zealand Limited (“ANZ”). Many of the loan applications related to multiple property transactions. The total value of the loans in issue is over $54 million.

[2] All three defendants face a number of “obtaining credit by deception” charges pursuant to s 240(1)(b) of the Crimes Act 1961. In addition, Mr Chen and Mr Jiang each face one charge under the Secret Commissions Act 1910. A fourth person, Kang Huang, pleaded guilty to various related charges prior to trial.

[3] At the conclusion of the Crown case (during the seventh week of trial) the defendants each applied for dismissal, pursuant to s 147 of the Criminal Procedure Act 2011, of most of the obtaining by deception charges they face, on the basis that there is…

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 Xu

Details

AGLC: R v Xu [2018] NZHC 779
Case: [2018] NZHC 779
Decision Date: 23 April 2018

CaseChat Overview and Summary

Kang Xu, Gang Chen, and Zongliang Jiang stand trial in the High Court of New Zealand on multiple charges arising from an alleged large-scale mortgage fraud scheme. The defendants face numerous charges of obtaining credit by deception under section 240(1)(b) of the Crimes Act 1961, as well as other charges. The Crown's case is largely circumstantial, relying on a complex web of false documents, property transactions, and financial dealings to establish the alleged fraud. The defendants have applied to dismiss most of the obtaining by deception charges on the basis that there is no case to answer.

Key legal issues identified include whether the offence requires proof that the defendant personally incurred a debt or liability, the necessity of direct evidence to prove the causative link between deception and credit obtained, whether some lending decisions were made by computers, the requirement for the Crown to prove the absence of intention to repay the loans, and the sufficiency of evidence to support the Crown's contention that Kang Huang or LV Park were the true borrowers. The Court rejects the defendants' arguments on all points, finding that the statutory language, legislative history, and purpose of the offence support a broader interpretation. The Court holds that the Crown is not required to prove the absence of intention to repay the loans and that the term "true borrowers" is used in a broader sense in the charges. The Court also finds that sufficient evidence exists to support the Crown's case at this stage of the proceedings.

Ultimately, the Court dismisses all the defendants' applications to dismiss the charges against them, allowing the case to proceed to trial.

Orders