Szondy v District Court at Auckland
[2013] NZCA 345
•2 August 2013 at 10.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA630/2012 [2013] NZCA 345 |
| BETWEEN | GYULA BELA SZONDY |
| AND | THE DISTRICT COURT AT AUCKLAND |
| AND | THE REPUBLIC OF HUNGARY |
| Hearing: | 16 July 2013 |
Court: | O’Regan P, White and Cooper JJ |
Counsel: | G M Illingworth QC and A G V Rogers for Appellant |
Judgment: | 2 August 2013 at 10.30 am |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellant is to pay the second respondent’s costs for a standard appeal on a band A basis with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by White J)
Introduction
Mr Szondy is seeking to avoid extradition to the Republic of Hungary to face four charges of fraud. He has so far been unsuccessful, with the Auckland District Court deciding on the application of the Republic of Hungary that he is eligible for surrender under the Extradition Act 1999,[1] and the High Court dismissing his application for judicial review of the District Court decision.[2]
[1]Republic of Hungary v Szondy DC Auckland CRI-2011-004-8528, 15 March 2012
[District Court decision].
[2]Szondy v District Court at Auckland [2012] NZHC 2295 [High Court review decision].
He now appeals to this Court against the High Court decision. While other issues were raised in both the District Court and the High Court,[3] the sole issue on appeal is whether Gilbert J in the High Court was wrong not to accept that Judge Sinclair in the District Court had erred in law by finding that there was sufficient evidence to establish a prima facie case in relation to four of the 16 charges faced.[4]
[3]Mr Szondy’s statement of claim in the High Court judicial review proceeding challenged the validity of the District Court decision on a range of administrative law grounds, including unreasonableness.
[4]Under s 24(2)(d) of the Extradition Act 1999.
Before referring to the factual background, the decisions of the two courts below and the submissions of the parties on the sole issue on appeal, we note the following preliminary points.
First, the first respondent, the District Court at Auckland, abides the decision of this Court.
Second, the question whether Mr Szondy ought to have exercised his right under the Extradition Act to appeal by way of case stated rather than to proceed by way of judicial review was not raised by the Republic of Hungary in the High Court or argued before us.[5] We therefore follow the approach adopted by this Court in Edwards v United States of America and determine the sole issue on appeal in the context of Mr Szondy’s judicial review proceeding.[6]
[5]Extradition Act, s 68.
[6]Edwards v United States of America [2002] 3 NZLR 222 (CA) at [11].
Third, Mr Szondy accepts that each of the four charges of fraud under the Criminal Code of Hungary[7] is an “extradition offence” under the Extradition Act,[8] namely the extradition offence of “obtaining money or goods by false pretences” in article II(6) of the Treaty Between the United Kingdom of Great Britain and Ireland and Austria-Hungary for the Mutual Surrender of Fugitive Criminals.[9]
[7]Criminal Code of the Republic of Hungary, Act IV of 1978, s 318(1).
[8]Extradition Act, s 4; United States of America v Cullinane [2003] 2 NZLR 1 (CA) at [55].
[9]Treaty Between the United Kingdom of Great Britain and Ireland and Austria-Hungary for the Mutual Surrender of Fugitive Criminals, United Kingdom-Austria-Hungary [1901] ATS 5 (signed 3 December 1873, entered into force 30 March 1874). New Zealand, as a former colony of the United Kingdom, is a successor party of the Treaty.
Fourth, in the event that the District Court decision that Mr Szondy is eligible for surrender is upheld, the next step in the extradition process is for the Minister of Justice to determine whether Mr Szondy should in fact be surrendered to the Republic of Hungary.[10]
Background
[10]Extradition Act, s 30.
The original request by the Republic of Hungary for the extradition of Mr Szondy, who is a Hungarian national, related to 16 charges of fraud. It was claimed that Mr Szondy had procured personal loans from acquaintances in Hungary between 2000 and 2003 totalling 118,776,000 Hungarian Forints (NZD 950,208)[11] when he knew that he had no realistic prospect of being able to repay them.
[11]It was accepted that at the relevant time one hundred Hungarian Forints (HUF) was the equivalent of approximately 80 New Zealand cents.
Details of the 16 loans, the subject of the charges, are set out in the appendix to this judgment. The appendix is based on tables provided to this Court by Mr Kayes, counsel for the Republic of Hungary. The tables were accepted as accurate by Mr Illingworth QC for Mr Szondy.
Mr Szondy accepts that he was in serious financial difficulties when he left Hungary on 28 November 2003, but maintains that when he borrowed the money from his acquaintances he had every intention of repaying it or, more particularly, that no prima facie case has been established that he did not intend to do so.
Mr Szondy has been living in New Zealand since 15 January 2004.
In 2006 and 2009 two sets of hearings took place at the Central District Court at Pest in Hungary at which witnesses gave evidence in relation to Mr Szondy’s alleged offending. These hearings resulted in two bundles of materials which included a judicial deposition setting out the relevant Hungarian statutory provisions, the evidence of the witnesses and supporting documents, and provided the basis for the case against Mr Szondy. While the authenticity of these materials was challenged by Mr Szondy in the District Court, the challenge has not been pursued in his judicial review proceeding.
District Court
At the District Court hearing the Republic of Hungary did not seek extradition on five of the 16 charges,[12] but relied on the evidence of the loan transactions the subject of those charges in support of the remaining charges. Judge Sinclair accepted that the evidence was relevant and, while not constituting propensity evidence, was “part of the factual matrix of outstanding loans at the time the subsequent loan transactions were entered into”.[13] The Judge’s decision on the admissibility of this evidence has not been challenged by Mr Szondy in his judicial review proceeding.
[12]Charges 1, 7, 9, 12 and 15: District Court decision at [47], [60], [66], [78] and [90].
[13]District Court decision at [38]–[39].
Judge Sinclair decided, however, that there was insufficient evidence in relation to seven of the charges from which a reasonable jury, properly directed, could draw an inference that Mr Szondy obtained the relevant loans by false pretence and that he did so with intent to defraud the lenders in question.[14] In relation to six of those charges, this was because the Judge considered that too little was known about Mr Szondy’s financial position at the relevant times. In relation to count 16, the Judge found that there was insufficient evidence as to the loan itself and the surrounding circumstances for any adverse inferences to be drawn.
[14]Charges 2–6, 8 and 16: District Court decision at [48], [50], [52], [54], [55], [62] and [92].
In respect of the remaining four charges, the Judge decided that Mr Szondy was eligible for surrender.[15] As shown in the appendix to this judgment, these four charges were:
(a)count 10: a loan of 3,600,000 HUF (NZD 28,800) on 3 January 2003 from Mr Csaba Barta;
(b)count 11: a loan of 2,600,000 HUF (NZD 20,800) on 24 January 2003 from Mr Árpád Adorján;
(c)count 13: a loan of 5,000,000 HUF (NZD 40,000) on 31 July 2003 from Mr Gábor Kiss; and
(d)count 14: a loan of 5,250,000 HUF (NZD 42,000) on 9 September 2003 from Mr László Simon.
[15]Charges 10, 11 and 13–14: District Court decision at [69], [76], [80] and [84].
It is accepted that Judge Sinclair reached her conclusion that there was a prima facie case in respect of these four charges based on inferences drawn from all the evidence as to Mr Szondy’s overall financial position at the time each of the four loans was entered into. The overarching submission for Mr Szondy in his judicial review proceeding challenging the validity of the District Court decision is that the evidence did not disclose a proper basis for the ultimate decision-maker (the trial Court) to draw inferences of contemporaneous dishonesty at the time of each of the four loans.
High Court
In the High Court Gilbert J rejected Mr Szondy’s challenge to the validity of the District Court decision. Gilbert J held that Judge Sinclair was justified in concluding that there was sufficient evidence to enable a properly directed jury to convict Mr Szondy on the four charges.[16] Gilbert J did so on the basis that the District Court Judge had been obliged to consider whether there was sufficient evidence for a jury to convict Mr Szondy if the evidence were accepted and inferences most favourable to the prosecution were drawn.[17]
[16]High Court review decision at [20].
[17]At [20].
Gilbert J concluded that the District Court Judge had correctly taken into account Mr Szondy’s existing financial commitments at the time of each loan, the amounts of the loans, the dates for repayment, the interest rates payable, the loans that were overdue and his offers to pay unusually high rates of interest to secure the new loans.[18] Gilbert J did not accept that the District Court Judge had failed to have regard to any relevant evidence.[19]
Submissions for Mr Szondy
[18]At [19].
[19]At [20].
In support of Mr Szondy’s appeal to this Court, Mr Illingworth relies on the authorities relating to the discharge of an accused person who has “no case to answer” under s 347 of the Crimes Act 1961.[20] Mr Illingworth submits that where “the Crown’s evidence, taken at its highest, is such that a jury properly directed could not properly convict on it”, a case should not proceed. He also submits that when the Crown case is dependent, in whole or in part, on inferences, there must be credible evidence to establish facts capable of supporting the inferences.
[20]R v Flyger [2001] 2 NZLR 721 (CA) at [16]–[18]; Parris v Attorney-General [2004] 1 NZLR 519 (CA); and Fong v Attorney-General [2008] NZCA 425, [2009] 1 NZLR 600 (CA).
Mr Illingworth accepts, however, that to succeed on appeal Mr Szondy needs to establish that the inferences drawn by the District Court Judge were not open to her on the evidence and that, if a prima facie case were made out, any issues as to the inferences to be drawn would be resolved at the trial. These acknowledgements by Mr Illingworth correctly reflect the approach of this Court in United States of America v Dotcom, where it was said:[21]
[108] Finally, as we noted earlier, the record of the case procedure is an “on the papers” process as far as the requesting state is concerned. There can be no sensible expectation that a requesting state such as the United States will have potential trial witnesses available in New Zealand for an extradition hearing. This affects the extent of the evaluation that the extradition court can conduct and the nature of the evidence that the suspect can reasonably expect to present. The role of the extradition court is, as the Canadian and United Kingdom courts have repeatedly said, a limited one. In this context, it is to ensure that the requesting state has presented sufficient evidence to indicate that there is a prima facie case against the suspect. A suspect may well be able to point to gaps or flaws in the material summarised or analysed in the record of the case, or may be able to point to documentary or other evidence which causes the extradition court to doubt the reliability of the material proffered by the requesting state. This may cause the extradition court to conclude that the requesting state has not established a prima facie case. But a challenge which does not go to the reliability of the material in the record but to its interpretation – that is, to the inferences that should be taken from it – is more appropriate to a trial than to an extradition hearing.
(Emphasis added.)
[21]United States of America v Dotcom [2013] NZCA 38, [2013] 2 NZLR 139.
On this basis Mr Illingworth submits that the District Court Judge’s analysis of the evidence was flawed because:
(a)There is evidence that Mr Szondy had been engaged in a variety of bona fide business activities over a significant period of time, he had borrowed money privately for business purposes over a period of several years and on previous occasions he had been reliable in making repayments.
(b)There is no evidence of Mr Szondy’s total assets or income as at 3 January 2003 or that, as at that date, his only assets were his car and an insurance policy.
(c)There is no evidence that the explanations allegedly given by Mr Szondy for borrowing money were mutually inconsistent or were otherwise incorrect.
(d)The fact that Mr Szondy chose to borrow privately rather than from a bank could not conceivably form a proper basis for an adverse inference. Whether such a practice was in any way unusual in Hungary in 2003 is unknown and the Court should not speculate.
Mr Illingworth submits that the District Court Judge also overlooked evidence relating to Mr Szondy’s assets and earning capacity, including evidence that:
(a)He held a leading position as a contract manager in an insurance company and had other enterprises.
(b)He had a car accessory shop in Bakats Square and could make a 40 per cent profit by buying and selling goods.
(c)He was engaged in the purchase, renovation and resale of real estate.
(d)He was decent and reliable and always paid back the interest on loans.
(e)He purchased an apartment via the Sailing Association at Balatonszemes (a village on Lake Balaton) where he was engaged in a building project.
(f)He was “always a fair partner who accounted with [Mr Miklos Nikolin]”.
(g)He was doing business with the Stolwerk chocolate factory.
(h)His interest in the Sailing Association at Lake Balaton resulted in a payment of HUF 3,200,000 to Gábor Kiss.
Mr Illingworth points out that this evidence was supported by Mr Szondy’s own evidence and that evidence from a Hungarian government employee, whose investigation indicated that only a few assets had been identified, related to the period after Mr Szondy had left the country in late 2003. At the same time Mr Illingworth acknowledged in the course of argument that most of the evidence referred to in the previous paragraph related to the period prior to 2003 when Mr Szondy borrowed the money the subject of the four charges.
Mr Illingworth submits, however, that, taken as a whole, the evidence indicates that Mr Szondy entered into the four transactions with an honest intention to repay and only later found out that he was in serious financial difficulty. In those circumstances it was wrong for the District Court Judge to conclude that the evidence was capable of supporting a legitimate inference that, at the time Mr Szondy promised to repay the four loans, he was being deliberately dishonest. The Judge’s reasoning was inconsistent with the elementary principle that an inference must be a logical deduction from process facts and must not involve speculation or guesswork.
Finally, Mr Illingworth submits that Gilbert J erred in failing to conclude that the reasoning process adopted by the District Court Judge was deficient.
Decision
For the following reasons, which largely reflect the decisions of the Courts below and the submissions for the Republic of Hungary, we conclude, having examined the relevant evidence, that Gilbert J was not wrong to accept that Judge Sinclair had not erred in law by finding that there was sufficient evidence to establish a prima facie case against Mr Szondy in respect of the four charges. We are satisfied that the District Court Judge did not overlook the relevant evidence and that the inferences she drew as to Mr Szondy’s intentions at the time of the four loans were open to her on the evidence. Any dispute as to the inferences to be drawn from the evidence should be resolved at the trial and not at this preliminary stage, which is limited to determining whether there is a prima facie case.
First, as Mr Kayes’ submissions show, all of the evidence relating to Mr Szondy’s business activities that it is claimed the District Court Judge overlooked is in fact referred to by the Judge in her decision.[22]
[22]District Court decision at [42], [47], [50], [54], [67], [69], [76], [78], [85], [86], [88] and [90].
Second, the District Court Judge in her decision focussed closely on all the relevant evidence relating to Mr Szondy’s financial position at the time he entered into each of the loan agreements which were the subject of the charges before her. Having done so, she found that the evidence was not sufficient to enable her to draw adverse inferences about Mr Szondy’s repayment intentions in respect of seven of those loans. She therefore decided that he was not eligible for surrender on the charges relating to those loans.
Third, there was ample evidence relating to Mr Szondy’s overall financial position as at 3 January 2003 when he borrowed the HUF 3,600,000 from Mr Csaba Barta. The evidence established that by then:
(a)Mr Szondy had already sold his family home in Budapest (in 2002) in part payment of his debt to Dr Nándori of HUF 40,000,000, leaving a shortfall of 12,000,000.
(b)Mr Szondy was in straitened financial circumstances from 2000 onwards.
(c)As the appendix attached to this judgment shows, he borrowed a total of HUF 94,826,000 (NZD 758,608) in the period from 2000 to 2003.
(d)These loans were obtained when he apparently had a salary from his insurance business and owned a motor parts business.
(e)He borrowed to purchase stock for his business.
(f)There was no evidence of any assets other than a business with liabilities.
(g)He offered little meaningful security for his loans.
(h)He no longer owned any apartments at Lake Balaton, but even if he had owned three or four apartments there they would only have been worth HUF 15,000,000–20,000,000.
(i)As at the dates of each of the four loans his position was:
Dates of loan Amounts owed Amounts due NZD due
3 January 2003
HUF 64,826,000
HUF 46,926,000
375,408
24 January 2003 HUF 68,426,000 HUF 49,926,000 399,408 31 July 2003 HUF 77,026,000 HUF 52,226,000 417,808 9 September 2003 HUF 81,776,000 HUF 52,726,000 421,808 (j) He agreed to pay interest well above the bank rate of 10 per cent.
Fourth, the cumulative effect of this evidence was more than sufficient to justify the inferences drawn by the District Court Judge that on the dates Mr Szondy obtained the four loans the subject of the four charges he had no intention of repaying them. By 3 January 2003 not only had his family home been sold to meet part of one earlier loan but he was indebted to the tune of over HUF 64,000,000. He had no means of meeting his interest payments, let alone repaying the loans. He was already in such a serious financial position that by the end of 2003 he was forced to disappear and abscond from his creditors in Hungary.
Gilbert J was therefore right to conclude that the inferences drawn by the District Court Judge were open to her on the evidence and that a prima facie case had been established. No ground for judicial review has been made out.
Result
Mr Szondy’s appeal is accordingly dismissed.
Mr Szondy must pay the Republic of Hungary its costs for a standard appeal on a band A basis with usual disbursements.
Solicitors:
McLeod & Associates, Auckland for Appellant
Crown Law Office, Wellington for First Respondent
Crown Solicitor, Auckland for Second Respondent
APPENDIX: TABLE OF LOANS
Counts in relation to which a prima facie case was found indicated with shading and an asterisk.
| Count Number | Capital Borrowed (in HUF) | Outstanding at 3 January 2003 (excluding interest) | Agreed NZD Equivalent at 3 January 2003 | Date of Loan | Date for repayment (including time extensions) | Lender |
| 16 | 40,000,000 | 12,000,000 | 96,000 | From 2000 (instalments) | From 2001 | Dr Kálmán Nándori |
| 2 | 5,000,000 | 4,000,000 | 32,000 | 26 May 2001 | 26 July 2002 | Dr Sándor Magyar |
| 3 | 5,000,000 | 5,000,000 | 40,000 | 15 October 2001 | 15 October 2002 | Mr András Szantó |
| 1 | 13,000,000 | 13,000,000 | 104,000 | November 2001 (instalments) | Shortly after loan (repayment on notice) | Ms Györgyné Dián |
| 4 | 6,000,000 | 5,000,000 | 40,000 | 31 December 2001 | 31 December 2003 | Mr Kálmán Bella |
| 5 | 5,400,000; 1,526,000; 5,300,000 (instalments) | 12,226,000 | 97,808 | 1 February 2002; 9 April 2002; (unknown) 2002 | 31 May 2002; 9 July 2002; 31 January 2003 | Mr Ádám László |
| 6 | 6,000,000 | 6,000,000 | 48,000 | 17 March 2002 | 17 September 2002 | Ms Gabriella Sashegyi |
| 8 | 6,000,000 | 6,000,000 | 48,000 | 25 September 2002 | 15 December 2003 | Ms Katalin Zsótér |
| 7 | 800,000 | 800,000 | 6400 | 14 October 2002 | 14 October 2003 | Ms Judit Ördög |
| 9 | 800,000; 3,000,000; 500,000 (instalments) | 800,000 | 6400 | 15 November 2002; 19 March 2003; 22 April 2003 | 15 November 2003 | Mr László Ördög |
| 10* | 3,600,000 | - | - | 3 January 2003 | 3 January 2004 | Mr Csaba Barta |
| 11* | 2,600,000 | - | - | 24 January 2003 | 24 January 2004 | Mr Árpád Adorján |
| 12 | 2,500,000 | - | - | 6 June 2003 | 6 June 2004 | Mr László Zólyomi |
| 13* | 5,000,000 | - | - | 31 July 2003 | 31 July 2004 | Mr Gábor Kiss |
| 14* | 5,250,000 | - | - | 9 September 2003 | 15 December 2003 | Mr László Simon |
| 15 | 1,500,000 | - | - | 22 October 2003 | 22 October 2004 | Mr Miklós Nikolin |
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