Raki v Department of Internal Affairs
[2013] NZHC 3550
•20 December 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2013-404-000160 [2013] NZHC 3550
BETWEEN LINDSAY RAKI
Appellant
AND
DEPARTMENT OF INTERNAL AFFAIRS
Respondent
Hearing: 18 November 2013 Appearances:
G P Denholmm for Appellant
B Hamlin for RespondentJudgment:
20 December 2013
JUDGMENT OF KEANE J
This judgment was delivered by on 20 December 2013 at 2pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Date:
Solicitors:
Crown Solicitor, Auckland
RAKI v DEPARTMENT OF INTERNAL AFFAIRS [2013] NZHC 3550 [20 December 2013]
[1] On 22 January 2013, following a five day summary trial before Judge E M Aitken in the District Court, Auckland, Lindsay Raki was convicted of 11 thefts between 30 October 2006 – 7 July 2008, for reasons the Judge gave in a comprehensive decision three days later.1 On 1 May 2013 he was sentenced to imprisonment for two years, nine months. He appeals his conviction and sentence.
[2] Ten of those thefts were from the Manurewa High School Rugby Academy, and they came to $184,216. One, for $120,000, was from Counties-Manukau Youth Development Incorporated. In all, therefore, the Judge found, Mr Raki stole
$304,216.
[3] In her decision on sentence the Judge helpfully set out, in the main outline, the circumstances in which she had found in her primary decision that Mr Raki had offended to the extent that he had; and in this decision I freely adapt what she then said. It was essentially this:2
Over the period of his offending Mr Raki had sole control of the financial affairs of the Manurewa Academy and of another community-based entity, Manukau Youth Development. The Manurewa Academy was set up in 2003 to coach rugby at that school and to provide pastoral support to students at the Academy.
From 2003 – 2006 it operated largely on a volunteer basis, claiming only a small amount of funding. However, that changed in 2006 when it began to receive substantially greater funds. From April 2006 until August 2008 (and that includes the period of Mr Raki’s offending) it received in excess of
$1.1M in grants in which in excess of $700,000 were paid or transferred directly into his bank account; $304,000 of that amount formed the subject
of his charges.
In 2007 Manukau Youth Development was set up. It had the same purposes and overlapped to some considerable extent with the Manurewa Academy, to the point where some witnesses considered them to be one and the same, and the Manukau Youth Development received $200,000 in grants from 2007 –
2008 along with other funding.
Both of those societies have constitutions and under those constitutions financial power is vested with the committee. The committees meet monthly and part of the role of the committees is to approve invoices presented for payment and Mr Raki was responsible for day to day operations and financial operations of both of those societies. .... He is a trained accountant, in business as such at the time and there is no dispute that
1 Department of Internal Affairs v Raki DC Auckland CRI-2011-055-001469, 25 January 2013.
2 Department of Internal Affairs v Raki DC Auckland CRI-2011-055-001469, 1 May 2013 at [3] –
[8].
he was the one with sole responsibility for the financial administration of the
Manurewa Academy and Manukau Youth Development.
Over the relevant period, the period of Mr Raki’s offending, indeed over a much longer period, a number of grants were made by both the Water Safety Education Foundation and the Pacific Sports and Community Trust to both Manukau High School Rugby Academy and the Counties Manukau Youth Development Society. The grants were applied for and out for stated reasons relating, on the face of the applications and as part of the condition of the grant, to the running of each of those societies.
Money was paid into the accounts on a regular basis. Mr Raki had access to those accounts and on each of the 11 occasions he transferred either the full amount or part of a grant amount directly into his own personal accounts. The amounts that he transferred varied; the smallest amount was $5,000, the largest $120,000. On each occasion he transferred the money, it appeared from the records, almost immediately after it was deposited in the Society accounts or very soon after and almost always on the same day. On transferring that money directly out of the Society accounts he often left those accounts with a nil balance and he was almost always transferring money into his significantly overdrawn personal accounts.
[4] As the Judge said in her primary decision, Mr Raki did not dispute he had transferred grant moneys to his personal accounts. (And not just those the subject of the theft charges either; he had abstracted an almost equal amount not the subject of any charge.) He denied that he had done so dishonestly and without claim of right, knowing that he lacked any species of authority. He denied that he intended to deprive either society of the funds transferred.
[5] In her primary decision, and again on sentence, the Judge rejected completely Mr Raki’s evidence and that of his witnesses. She dismissed as ‘false documents in an attempt to create a paper trail’, invoices Mr Raki produced that were supposedly rendered to the Manurewa Academy by A T Marketing or by him for accounting and administrative services. She found they were prepared much later, and that the work invoiced could not have been done by the date they were supposedly rendered. She found they had no basis in fact.
[6] On sentence the Judge said that the Manurewa Academy and Manukau Youth Development were no longer operative. There were no victim impact statements, or any identifiable victims. But Mr Raki’s offending was not victimless and she took into account the magnitude of his offending and the related breach of trust.
[7] The Judge said that Mr Raki had offended in a moderately sophisticated way. But, primarily, she said, he had been able to offend because he had enjoyed complete control of the finances of both societies. He was a qualified accountant and a leader within his community. He had abused the trust placed in him. Also aggravating was that, to create his paper trail, he had implicated others. Of especial concern to her was that he continued to practise as an accountant.
[8] On sentence, the Judge said also, nothing of the $304,000 stolen remained. Mr Raki had not offered realistic reparation and any moneys he had paid back during his offending had only been to ensure that he could continue to offend undetected. She did credit him with a wider contribution to his community. She took into account the toll a five year investigation had taken on him and his family.
Four grounds of appeal
[9] Mr Raki first contends that the Judge wrongly convicted him of five thefts of grants to the Manurewa Academy by the Water Safety Foundation between October
2006 – July 2008, totalling $74,000, for administrative, accounting and other services. Those services, he contended, were provided by AT Marketing or more usually by him on its behalf. He was entitled to draw down the funds, relying on an enduring power of attorney, dated 15 August 2003, given him by AT Marketing’s principal shareholder, Andrew Talaimanu; a right Mr Talaimanu confirmed in evidence.
[10] Mr Raki contends, secondly, that the Judge wrongly convicted him of three of the thefts totalling $103,000, all made to the Manurewa Academy on 25 March 2008 by Pacific Sports and Community Trust for travel expenses and coaching fees. He contends that he made offsetting payments to or for the academy, that are inconsistent with any intent on his part to deprive it permanently of those funds; a payment that must also, in the event that his convictions are sustained, be mitigating on sentence.
[11] Mr Raki contends, thirdly, that the Judge wrongly convicted him of the theft of a $120,000 Water Safety Foundation grant made in July 2008 to Manukau Youth Development to fund coaching. The two coaches funded by the grant, Grant
Ferguson and David McLean, both gave evidence consistent with his that they received this lump sum, in advance of their services, and authorised him to invest it in a hotel redevelopment in Cambridge.
[12] Finally, Mr Raki contends, the Judge should not have convicted him of theft on 30 October 2006 of $2,216.65 from the Manurewa Academy. A theft on that date in that amount is unsupported by the evidence. The Department accepts that the date should have been 31 December 2007 but, it contends, the date was a particular, not an element of the offence, and the correct date was never in doubt. Had leave to amend been applied for it would likely have been granted. As to that I agree.
Principles of law applying
[13] This is an appeal under s 115 of the Summary Proceedings Act 1957; it is by way of rehearing, and this Court has a wide power to resolve the appeal in such fashion as it considers just.3 On a general appeal, Elias CJ said, in Austin, Nicholls
& Co Inc v Stichting Lodestar, an appellant is:4
entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and involves a value judgment.
[14] Earlier, the Chief Justice had said that, though an appeal court does not owe deference to the court appealed from, the latter may enjoy a particular advantage, most notably (in this case), 'the opportunity to assess the credibility of witnesses where such assessment is important',5 and:6
In such a case the appeal court may rightly hesitate to conclude that findings of fact or fact and degree are wrong. It may take the view that it has no basis for rejecting the reasoning of the tribunal appealed from and that its decision should stand.
[15] Ultimately, the Chief Justice said, there is an onus lying on the appellant to satisfy the appeal court that it should differ from the decision under appeal.7 It is
3 Summary Proceedings Act 1957, s 119, 121.
4 Austin, Nicholls & Co Inc v Stichting Lodestar [2007] NZSC 103 at [16].
5 At [5].
6 At [5].
7 At [4].
only if the appeal court considers the decision appealed is wrong that it is justified in interfering with it.
[16] No express issue is taken on this appeal with the Judge’s identification of the elements of the offence of theft or of the concept of dishonesty.8 Taking into account the Supreme Court’s decision in R v Hayes,9 the Judge recognised that Mr Raki’s belief in consent or authority did not need to be reasonable or honest. But if it were unreasonable, she was entitled to infer that it could not be a belief he genuinely held. Also, even if Mr Raki could point to grounds for an honest belief, he had actually to
hold it.
[17] Issue is taken with the Judge’s findings of fact: her primary findings, and her inferences, crystallising in her conclusion that Mr Raki had in the 11 instances charged acted dishonestly and without claim of right and without any genuine belief that he was entitled to act as he did, and that he had intended to deprive the societies of the funds he transferred.
[18] As to such findings as these, which rested ultimately very much on what could be inferred from the circumstances as a whole, as to Mr Raki’s actual state of mind, French J said in Ah’sam v Police, speaking of the ‘claim of right’ there in issue, it remains a well established principle that a finding as to ‘the existence or otherwise of ... (a) professed belief ... (is) essentially a finding of credibility’, which
an appellate court ‘should be very loath to overturn.10
[19] I approach this appeal on that basis. The Judge saw and heard the witnesses over five days and made particular findings as to each charge that culminate in her conclusion that Mr Raki was serially dishonest between October 2006 – July 2008; and that he and his witnesses were equally dishonest in evidence. It is incumbent on
him to demonstrate that she lacked a basis in primary fact for those critical findings.
8 Crimes Act 1961, 217, s 219(1).
9 R v Hayes [2008] 2 NZLR 321 (SC).
10 Ah’sam v Police HC Christchurch, CRI-2010-409-231, 23 March 2011 at [33].
First appeal ground – power of attorney
[20] The five convictions Mr Raki challenges under his first head of appeal all concern thefts made from the Manurewa Academy account of grants made by the Water Safety Foundation to meet the cost of administration, accounting and other services:
(a) The first two convictions concern the theft of a $15,000 grant made in October 2006. On 31 October 2006 Mr Raki transferred that grant to his joint account with his partner in two sums, $5,000 and $10,000.
(b)The third conviction concerns a $45,000 grant made on 18 October 2007 as to which, Mr Raki transferred $26,000 to his My Money account the following day; a joint account then $152,455 overdrawn.
(c) The fourth and fifth convictions concern a $50,000 grant on 3 July 2008:
$20,000 for administration services and $30,000 for academic program services. On 4 July Mr Raki transferred $20,000 to his My Money account, then overdrawn, and on 7 July 2008 $13,000 to his accounting practice, Ardmore Taxation Consultancy.
[21] These transactions and the thefts Mr Raki has been found culpable of, are essentially indistinguishable and it will be enough if I refer only to the first transaction as illustrative.
First transaction
[22] As to the October 2006 Water Safety grant, Mr Raki accepted that he lacked specific authority from A T Marketing to transfer that grant to his own account. But he said he had Mr Talaimanu’s authority to carry out the whole project for which the grant had been made and to invoice the company. He produced an invoice for
$15,000, dated 31 October 2006; and a retrospective specific authority from Mr Talaimanu, dated 1 July 2011; and finally relied on the enduring power of attorney, which supplies the basis for this first ground of appeal.
[23] Mr Talaimanu gave evidence that Mr Raki had been entitled to the funds due to A T Marketing, relying on an invoice, dated 1 November 2006, for almost
$17,000, including GST. But of the sum invoiced only $7,000 was attributable to the grant. Mr Talaimanu also accepted that this invoice was prepared with Mr Raki in February - March 2012. As to Mr Raki’s right to rely on the power of attorney, Mr Talaimanu only said that possibly Mr Raki did finally rely on it.
[24] The Judge rejected this evidence completely. It was especially incongruous, she found, that the grant had been made on 30 October 2006 and that Mr Raki had paid himself out the full grant the following day. Mr Raki’s invoice, dated 31
October 2006, and that of AT Marketing, dated 1 November 2006, the Judge held, could not be for services performed after the grant was made, as they would have had to have been.
[25] The Judge found Mr Raki’s invoice was false, because it came from an invoice book interspersed with invoices issued in 2007 and 2008. She rejected Mr Talaimanu’s evidence as vague and unconvincing and rejected Mr Raki’s reliance on the power of attorney. It had been given, she found, earlier in wholly different circumstances and she also said this in one of the analyses she made of these five
thefts:11
It is implausible that the defendant believed the power of attorney provided authority to make such a transfer. The fabrication of invoices and the creation of the written confirmations of the claimed oral agreements are inconsistent with any genuinely held belief that he had such authority.
Conclusion
[26] I see no error in the Judge’s reasoning. To become entitled to the grant moneys A T Marketing had to provide the services for which each grant was made, after the date of the grant. Until it did so it had no right to them. By drawing down the grants the day after they were made Mr Raki must have known that he had no right. Mr Raki also says that the invoices were for future services. But that would be a remarkable departure from commercial practice and would call for specific
evidence. Such evidence is wholly lacking.
11 At [238].
Second ground - reparation payments
[27] In his second ground of appeal Mr Raki puts in issue the Judge’s finding that he misapplied three grants made to the Manurewa Academy by the Pacific Sports and Community Trust on 25 March 2008: $14,000 for travel expenses, $15,000 for company fees and $74,000 for coaching fees, $103,000.
[28] Mr Raki accepts that on the very date the grant was made he transferred it to his own accounts, $50,000 and $48,000 to his My Money account and $5,000 to his visa account. But he contends the Judge should have credited him with payments he made to the Academy or for its purposes amounting to $107,000. The Judge rejected that claim. She said this:
Of the $103,000 transferred by the defendant into his account on 25 March
2008, only two sums - $1,000 and $20,000 appear to have been transferred back into MHSRA account during the same period. Even if I were to regard those payments are repayment of the amount transferred, which I do not, I reject evidence that ‘most of the funds’ were returned to MHSRA at a later date. There is no evidence of that whatsoever on the documentation before me or even from the defendant himself.
[29] In this, Mr Raki contends, the Judge wrongly rejected his evidence that he had funded the activities the grant was made to advance in the following three ways:
(a) consistent with the $14,000 grant he had paid various travel costs personally and reimbursed himself from grant funds;
(b)consistent with the $74,000 grant he had funded payments for coaches in excess of that amount for which he had produced sufficient documentary evidence;
(c) consistent with the $15,000 grant he had paid for blazers, trousers and ties on an Amex account and other expenses to the value of $59,040, and his consultants had purchased a rugby bus.
[30] The immediate answer to this ground of appeal is that in the careful analysis she made of the accounting evidence the Judge found no basis on which to conclude that Mr Raki was any more credible on this issue than he had been as to other
offences charged. She found his analysis of the accounting records implausible and fabricated. I need only refer to some of the more obvious aspects of his evidence.
[31] Mr Raki was only able, for example, to make payments into the Manurewa Academy account for airfares because of funds that he drew from Manukau Youth Development. To the extent that he did fund payments to coaches he drew in part on funds from another coaching grant. His claim to be able to draw down the Manukau Youth Development funds for these and other purposes relied on a claimed right to coaching fees. That apart, he claimed to be entitled to $240,000 a year from the Counties-Manukau Rugby Union for a part-time coaching position.
[32] On this appeal Mr Raki has re-traversed the evidence but has not identified any point that erodes the Judge’s conclusion for the reasons she gave that he stole the grant in its entirety.
Third ground of appeal – coaching fees payments
[33] The third ground of appeal concerns a grant made to Manurewa Youth Development on 7 July 2008 by the Water Safety Education Foundation for the period 1 June 2008 – 31 May 2009, to fund two coaches to work with the schools within the district and with young players in the Counties-Manukau Rugby Club.
[34] Two coaching contractors, David McLean and Grant Ferguson, had both signed individual contracts with Manukau Youth Development dated 1 June 2008. Each was to receive $60,000 for their services over the course of a year, exclusive of GST. But on 7 July 2008 Mr Raki transferred the grant to his accountancy practice, Ardmore Taxation Consultancy Limited. It was used to finance the refurbishing of a restaurant bar complex in Cambridge, which resulted in a loss.
[35] Mr Raki’s evidence was that Mr McLean and Mr Ferguson were each entitled to their $60,000 annual payments in advance and that he transferred the grant to his consultancy to invest on their behalf and with their oral authority. Consequently, he acted with an honest belief that he was entitled to deploy the grant in this way, and Manukau Youth Development was not deprived because the grant was made to fund the services of Mr McLean and Mr Ferguson. They gave consistent evidence.
[36] The Judge rejected the evidence of all three. She did not accept that the annual payments agreed to under the contract could be paid out to Mr Ferguson and Mr McLean in advance. She also held that, consistent with the contracts they entered into, they were paid $5,000 monthly over four months. Nor did she accept that they had authorised Mr Raki to transfer the grant to his consultancy and use it as he had. Both were friends of Mr Raki and she found the evidence each gave implausible. I need only refer to some of the more obvious deficiencies in their evidence.
[37] Mr Ferguson, for example, whose evidence was that he had invoiced Manukau Youth Development for his services, first said that the invoice, which was plainly created more recently than July 2008, was a copy of the invoice then issued. Later he accepted that it was created in July 2012. Ultimately he accepted that he had never created an invoice in 2008 at all.
[38] Nor did Mr Ferguson give credible evidence that he had authorised Mr Raki in advance of the transfer being made. His declaration, that Mr Raki had that authority in June 2008, was made after he and Mr McLean had compared notes. Moreover, as the Department submitted, it was highly unlikely he would have entered into a verbal agreement to allow Mr Raki to use the funds in that way.
[39] Equally, Mr McLean denied discussing his evidence with Mr Raki in 2012 but even Mr Raki accepts that they did. Mr McLean could remember very little about Manukau Youth Development. He accepted that he did not give Mr Raki written authority and he could not recall when he had given him oral authority. There was an issue also as to his invoice.
[40] Mr McLean’s evidence as to what payments if any he received for coaching was equally unreliable. First he said Mr Raki only paid cash to a creditor of his. Later he said he had received only $5,000 into his bank account. Later still he accepted that he received a number of $5,000 payments but when re-examined effectively recanted.
[41] The Judge accepted the prosecution case that Mr Ferguson and Mr McLean had actually received regular $5,000 payments from Manukau Youth Development in July, August, October, December 2008 and that these equated intelligibly with a contract for $60,000 a year paid monthly consistent with normal practice. She accepted that a lump sum was inherently improbable.
[42] That conclusion, I consider, was fully open to the Judge on the evidence. There is nothing in this third ground of appeal and I have said already that I see nothing in the fourth either.
Sentence
[43] There is no issue on the appeal against sentence that the Judge was entitled to take a starting point of three and a half years imprisonment for a theft of $304,216. But in the first of his two grounds of appeal, Mr Raki contends that she should have reduced her starting point by the payments he had made for and on behalf of the Manurewa Academy.
[44] I have already found, in the context of the appeal against conviction, that the Judge’s findings as to this issue are secure and that no such credit is justifiable. Mr Raki’s second ground of appeal is that the Judge did not give him a sufficient credit for the three years during which the Departmental investigation continued and the two years it took to bring the charges to trial.
[45] As the Judge recognised, Mr Raki was investigated publicly in 2008 and was not charged until May 2011. Her decision was given in June 2013 and he appeared for sentence in May 2013. This prosecution, she said, had been hanging over him and his family for five years and that was ‘an inordinately long period of time’. But, as she said also, the nature of the case made for a lengthy investigation and perhaps also a more extensive trial process.
[46] The Judge elected not to give Mr Raki a discrete credit on this account. She chose to link it with one she gave him for assisting young people and the success of the Manurewa Academy between 2006 – 2011 (there tempered by the fact that he had taken advantage of the goodwill he had created). In the absence of a plea of
guilty, any remorse or reparation, the greatest credit she considered she could afford him was nine months.
[47] In my assessment that credit was if anything, as the Judge said, ‘rather generous’. The time the investigation took and then the process from charge to trial, was regrettably long, but this was a complex and fully contested case. Moreover, in the round, Mr Raki’s final sentence appears to me proportionate to his offending and
to his personal circumstances. His appeal against sentence is also dismissed.
P.J. Keane J
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