Roest v R HC Auckland CRI-2008-004-029179

[2011] NZHC 816

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2008-004-029179

BETWEEN  CORNELIS ROBERT ROEST Applicant

ANDTHE QUEEN Respondent

Hearing:         11 July 2011

Counsel:         B Dickey, T Molloy and W Cathcart for Crown

R Butler for Accused Roest

Judgment:      19 July 2011 at 3:00 PM

JUDGMENT OF VENNING J

ON APPLICATIONS FOR DISCHARGE:  COUNTS 1 – 6

This judgment was delivered by me on 19 July 2011 at 3.00 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Crown Solicitor, PO Box 2213 Shortland Street Auckland 1140

Copy to:            Cook Morris Quinn, Auckland  [email protected]

ROEST V R HC AK CRI-2008-004-029179 19 July 2011

Introduction

[1]      Mr Roest seeks orders that counts 1 to 6 in the indictment against him be quashed.  The application is made on the ground that the counts are not founded on evidence disclosed at depositions.

[2]      The depositions  were held  between  15  February 2010  and  7  May 2010. Following depositions the accused were committed for trial on the 10 Securities Act charges they faced.   However, the indictment filed on 17 June 2010 included additional counts under s 242 of the Crimes Act 1961, counts 1 to 6, against Mr Roest and Mr Petricevic.

Counts 1 and 4

[3]      Counts 1 and 4 charge that on 30 March 2007 the accused made or concurred in making or published, a false statement in the prospectus extension certificates dated 30 March 2007.   The certificates were signed by Messrs Petricevic and Davidson.

[4]      Mr Butler submitted counts 1 and 4 should be quashed because:

(a)      Mr Roest had not signed the extension certificates and they were not admissible against him;

(b)the Crown had circumvented the committal process when it ought to have applied  for leave  to  file an  amended  indictment  pursuant  to s 345(3) of the Crimes Act 1961:  R v Dixon;1

(c)      in  committing  Mr  Roest  to  trial  on  these  counts  the  Crown  had deprived him of a depositions hearing in breach of s 25(f) of the New

Zealand Bill of Rights Act 1990;  and

1      R v Dixon [1997] 1 NZLR 54.

(d)the Crown was not entitled to rely on post-indictment evidence to now support the counts.

Admissibility of the certificates against Mr Roest

[5]      The particulars to support counts 1 and 4 allege that the statements in the extension certificates that the prospectuses were not, at 30 March 2007 false or misleading in a material particular were false as the prospectuses failed to disclose that Bridgecorp had missed payments of interest and principal (since 7 February

2007).

[6]      Mr  Butler  submitted  that  the  statements  in  the  prospectus  extension certificates, which counts 1 and 4 relied on, were the statements of a co-accused and inadmissible against Mr Roest:  s 27(1) Evidence Act 2006.

[7]      In  response  the  Crown  submitted  first  that  s  138  of  the  Evidence  Act stipulates a certification process by which a copy of a document that is or purports to be a public document is presumed, unless the Judge decides otherwise, to be a public document.  The Crown submitted the extension certificates are public documents and are properly admissible under s 138(1) as such.

[8]      I am unable to accept that s 138 applies or has that effect in this case.  Section

138 provides for a presumption as to authenticity of public documents.   It also confirms that public documents are not subject to the rules against hearsay contained in subpart 1 of Part 2 of the Evidence Act.  However, that does not make documents that would be inadmissible on other grounds admissible for all purposes.  Further, even if the extension certificates are public documents, it does not necessarily follow that they could not also be, at least in part, statements of a co-accused.

[9]      The Crown next submitted that the rule in s 27(1) against the admissibility of a co-defendant’s statement did not apply because the statutory requirements relating to the creation and the content of the extension certificates created a special agency relationship amongst all directors, including Mr Roest, so that the statements in the extension certificates were Mr Roest’s statements at law.

[10]     The Crown said that s 37A(1A) of the Securities Act 1978 creates such an agency.  Mr Butler submitted that the extension certificates were for the purposes of the Securities Act only and were transactional rather than evidential.  The extension certificates are provided for in s 37A(1A) of the Securities Act.  The section provides that, although the certificate is only signed by two directors, it is signed on behalf of all directors.   It contains a statement that, in the opinion of all directors, after due inquiry by them, the financial position has not materially and adversely changed during the relevant period and the registered prospectus is not, at the date of the certificate, false or misleading in a material particular.

[11]     In signing the extension certificate the directors who did so signed on behalf of the other directors. When signing the certificates in that way the directors signed as agents of the other directors.  As statements by his agents, the statements in the extension certificates are admissible against Mr Roest.2     The certificates enabled Bridgecorp Ltd and Bridgecorp Investments Ltd to leave the prospectuses before the investing public.   The agency supports the charge Mr Roest made, concurred in making or published a false statement (assuming for present purposes the statement is proved to be false).

[12]     Alternatively even if, prima facie, the statements in the certificates were not admissible against Mr Roest because of the operation of s 27(1) of the Evidence Act, s 27 is itself subject to s 12A.   Section 12A preserves the rules of common law relating to the admissibility of statements of co-accused in certain circumstances, including where the co-defendants’ statement is accepted by the accused.

[13]     As noted in Peter Watts and FMB Reynolds  Bowstead and Reynolds on Agency (19th ed, Sweet & Maxwell, London, 2010) at [2-074] ratification can no doubt be inferred without difficulty from silence or inactivity in cases where the principal, by failing to disown the transaction, allows the state of affairs to come

about which is inconsistent with treating the transaction as unauthorised.

2      A statement made by a solicitor when acting under instructions from a client is regarded as a statement of the client: R v Harris [1998] 1 NZLR 405 at 407 (CA).

[14]     Mr Roest has, in effect, made the statements in the certificates his own by accepting the truth of the statements and permitting them to be issued.  Ms Wong, general counsel at Bridgecorp, gave evidence at depositions that on 8 March 2007 she sent an email to various members of the management team, copied to Mr Roest, referring to proposed amendments to the prospectuses and asking whether any amendments were required to be made.  In that email she also addressed the issue of the prospectus extension certificates that were to be executed:

At the same time these amendments are made, the directors will need to satisfy themselves that all other information in the prospectuses remains accurate and is not misleading due to any events which have occurred following the date of registration of the prospectuses (being 21 December

2006).

[15]     That evidence supports a finding that Mr Roest knew the purpose of the certificates which Messrs Petricevic and Davidson subsequently executed on behalf of all directors.  The information was incorrect and Mr Roest thus concurred in the making or publishing the false statements.  The certificates are admissible evidence against Mr Roest in relation to counts 1 and 4.

[16]    Section 345(1) is itself the answer to the argument that the Crown has circumvented the committal process by including counts 1 – 6 in the indictment.  It permits  the  Crown  to  file  an  indictment  for  any  charge  founded  on  evidence disclosed at depositions.   The Crown is not bound by the pre-committal charges chosen by the police or informant:  R v H.3

[17]     It follows that the submission the Crown was required to apply for leave to file an amended indictment cannot succeed.  For the same reasons, namely that there was evidence at depositions to support the count, the argument that consent was required under s 345(3) is misconceived.

[18]     Finally, the argument that the inclusion of counts 1 to 6 in the indictment is a breach of the applicant’s rights under s 25(f) of the New Zealand Bill of Rights must also fail.  The Crown was authorised by the provisions of the Crimes Act to include

the  counts  in  the  indictment.    The  applicant  was  represented  at  depositions  by

3      R v H (1992) 9 CRNZ 474.

counsel.  The applicant will be able to challenge the evidence relating to these counts at trial.  Mr Roest’s rights under s 25(f) have not been infringed.

Counts 2 and 5

[19]     Counts 2 and 5 charge that between 30 March 2007 and 2/6 July 2007 the accused made or concurred in making or published false statements in the relevant prospectuses (dated 21 December 2006) namely that Bridgecorp had never missed an interest payment or, when due, repayment of principal.

[20] In addition to the inadmissibility argument (which for the above reasons must fail) Mr Butler submitted counts 2 and 5 could not succeed because they were framed on the basis of a deliberate failure to correct a known falsity which purported to make Mr Roest liable for an omission. He also submitted the Crown sought to introduce a duty under s 242 that does not exist. The imposition of a duty to correct was contrary to the sections introduced by the Crimes Amendment Act 2003. He then submitted there was a lack of contemporaneity between the alleged statement, namely the prospectus dated 21 December 2006 and the falsity which is alleged to have occurred at a later date.

[21]     Finally he submitted there was no actus reus because, when the statement was initially made on 21 December 2006, it was not false.

Liability for an omission

[22]     Mr Butler submitted the Crown again relied on the extension certificates and that as Mr Roest did not sign the extension certificate he could only be liable for failing to correct it later and that, absent express statutory language to that effect an accused is generally not liable for omissions:   AP Simester and WJ Brookbanks Principles of Criminal Law (3rd ed, Brookers, Wellington, 2007) at [3.2]. Mr Butler submitted the counts are framed on the basis of a failure to correct a known falsity but that s 242 did not create a duty to intervene. Section 242, together with ss 260 and 240 were introduced into the Crimes Act by the Crimes Amendment Act 2003.

Mr Butler submitted that R v Thompson4 did not assist because that case considered s 252, and s 252(2)(b) expressly provided for liability for an omission in relation to a material particular whereas s 242 did not.

[23]     The short answer to the challenge to these counts on that basis is that Messrs Petricevic and Davidson signed the extension certificates as agents for all directors, including Mr Roest so that it can be said Mr Roest made, concurred in making or published a false statement.

[24]     Further, it is sufficient if Mr Roest concurred in the making of the false statement.    The  Court  of Appeal  discussed  the  concept  of  “concurring”  in  this context in R v Thompson.   While Mr Butler submitted that Thompson was not as helpful as the Crown suggested, because in that case the Court was considering a different section, s 252, the comments in the decision in that case were not restricted to consideration of an omission.   Section 252 provided for both false entries and omissions.   The Court’s comments apply to the making of a false entry or false statement.  The decision supports the proposition that for “concurrence” there is no requirement  that  the  act  or  event  has  to  precede  or  be  simultaneous  with  the

concurrent act. The Court said of that concept:5

We see no reason to construe the section so as to make it a crime to assent to an entry before or at the time it is made yet not a crime to come upon it afterwards and assent to it in circumstances where there is a duty to correct it, the authority and ability to do so and, of course, the required intent to defraud.

[25]     The Court was not restricting itself to considering the issue of an omission in that passage.   It was considering “concur” in the context of the making of a false entry or statement as well as the omission of a material particular.

[26]     The  judgment  of  this  Court  in  R  v  Petricevic6   is  consistent  with  that approach.

4      R v Thompson (1996) 14 CRNZ 235 (CA).

5      At 243.

6      R v Petricevic HC Auckland CRI-2008-004-029179, 25 March 2011.

[27]     Mr Butler submitted that such an analysis sought to introduce a duty under s 242 which did not exist.   But the Crown case is not based on an omission, but rather on Mr Roest’s concurrence with the false statement being made or published. Mr Roest’s failure to act in accordance with the separate duty under s 34(1) of the Securities Act to correct the false statement is further proof that he concurred in making the false statement.

[28]     Next, Mr Butler submitted there was a lack of contemporaneity between the alleged statement and the falsity.  The prospectus was issued on 21 December 2006 and the statement arguably became false in February 2007. Again the decision of R v Thompson is relevant. The Court of Appeal said:7

It was submitted that the word “concurs” carries meaning both of agreement or assent and of timing (as in concurrent).  … We do not accept however that to concur in an act or event the assent must precede or be simultaneous with it. …

[29]     I  accept  Mr  Cathcart’s  submission  that  similar  reasoning  applies  to  the charges under s 242 in the present case.   Bridgecorp and Bridgecorp Investments continued to distribute or publish the prospectuses from 7 February 2007 until the date of receivership and/or liquidation.  Further, the recent Court of Appeal decision

in R v Steigrad8 confirms that the distribution or publication is not limited to the first

distribution.  The distribution or publication can be over a number of days, even on each day during the period the prospectuses are before the public.   That authority also addresses Mr Roest’s argument based on the actus reus occurring only on 21

December 2006.

Counts 3 and 6

[30]     Counts 3 and 6 charge that between 7 February 2007 and 2/6 July 2007 the accused made, concurred in making, or published a false statement in the relevant investment statements (21 December 2006). Again the false statement alleged is that Bridgecorp had never missed an interest payment or when due, a repayment of

principal.

7      At 243.

8      R v Steigrad [2011] NZCA 304.

[31]     In addition to the above arguments, Mr Butler submitted that there was no evidence disclosed at depositions that  Mr Roest knew the statements were false, so he could not be liable for failing to correct a known falsity.  However, as Mr Cathcart submitted,  that  submission  is  misconceived.    The  depositions  evidence  of  Mr Jeffcoat,  the  New  Zealand  General  Manager  –  Lending,  for  example,  is  that  it became clear at the end of March that the quarterly interest run may not be able to be processed on due date.

[32]     Mr Jeffcoat said he then attended a meeting with Mr Petricevic, Mr Roest, Christine Todd and John Welsh about the issue.  The reason for the meeting was to consider what to say to investors when they rang asking about their interest not being paid.  It was agreed the investors would have to be told something.  They came up with the idea of telling the investors that there was a computer glitch.  This message was then conveyed to the Investor Services Team to tell investors.

[33]     In addition there is the evidence of Ms Wong who met with Mr Roest (and others) and discussed the missed interest payments in the context of the statements in the prospectus.

[34]     That evidence, led at depositions, provides a sufficient evidentiary basis to answer the submission that there was nothing disclosed in depositions about Mr Roest’s knowledge that the statements were false.

[35]     The Crown was not required to adduce evidence of any duty.  The duty was created by s 34(1) of the Securities Act 1978.

[36]     For the reasons given above, particularly in relation to counts 2 and 5, the balance of the grounds raised to support a dismissal of counts 3 and 6 cannot succeed either.

Result

[37]     For the above reasons, Mr Roest’s application for discharge in relation to counts 1 to 6 must be, and is dismissed.

Venning J