Te Rito v Ministry of Social Development

[2012] NZHC 1872

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2012-404-000086 [2012] NZHC 1872

BLAINE BERNELL SMITH TE RITO

Appellant

v

MINISTRY OF SOCIAL DEVELOPMENT

Respondent

Hearing:         2 July 2012

Counsel:         A F Kemp for the Appellant

E Fitzherbert and L J Clancy for the Respondent

Judgment:      20 July 2012

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 20 July 2012 at 3 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:   A F  Kemp  Ministry  of  Justice  (Public  Defence  Service)  P  O  Box  90243

Victoria Street West Auckland 1142 (DX CX10025) for the Appellant

Meredith   Connell   P   O    Box   2213   Shortland   Street   Auckland   1140 (DX CP24063) for the Respondent

TE RITO v MINISTRY OF SOCIAL DEVELOPMENT HC AK CRI-2012-404-000086 [20 July 2012]

[1]      The appellant, Blaine Te Rito, pleaded guilty in the District Court to one charge of wilful omission and one charge of knowingly making a false statement under s 127 of the Social Security Act 1964.  He now believes that he has a defence to those charges and, therefore, he seeks leave to appeal his conviction out of time; this being the only way in which he could have the convictions re-visited.   The application for leave to appeal is opposed, as is the appeal.

Facts

[2]      On 19 October 2001, Mr Te Rito applied for and was granted a “Domestic Purposes Benefit” (the benefit).   One of the requirements of receiving the benefit was that he would immediately advise the Ministry of Social Development (the Ministry) if there were any changes to his circumstances that might affect his entitlement to benefit, including if he had changes to his income or financial circumstances.

[3]      The summary of facts to charges to which Mr Te Rito pleaded guilty alleges that he began operating a business, including establishing a website in 2007 and incorporating a company on 8 October 2008.  The summary of facts goes on to state that the Ministry has in its possession annual accounts for the year ending 31 March

2009, which show that Mr Te Rito earned $30,737.00 in that financial year.  It then states that Mr Te Rito had advised the Ministry on 18 February 2008 of one contract with Māori TV, “but did not advise of the full extent of his business endeavours”.  It further states that on 8 October 2008, Mr Te Rito completed an application for review to his entitlement to a benefit, stating on the form that in the previous 12 months,  he had  earned  $1,188.   The Ministry contends  that  in  reliance on  this document, it continued to pay Mr Te Rito a benefit.

[4]      The  summary  of  facts  records  that  at  interviews  on  29  October  2009,

25 November 2009 and 13 April 2010, Mr Te Rito acknowledged his obligations, but said in explanation that he had not advised the Ministry of all his business income because he was struggling to get the business going.  The Ministry alleges that as a result of the offending, Mr Te Rito received an overpayment of his benefit during the period 1 April 2008 to 10 February 2009 in the sum of $10,552.64.

[5]      When the charges were first called in the District Court on 3 August 2010, Mr Te Rito pleaded guilty, and received a sentence of 120 hours’ community work. Before entering these pleas, he was seen by a duty solicitor.   This was the only source of legal advice that he received before entering the pleas.

[6]      Mr Te Rito now seeks to appeal his convictions out of time on the grounds that: first, the convictions are unsafe due to him receiving insufficient legal advice before entering the guilty pleas; and secondly, he has a defence to these charges, which has not been presented to the Court.

[7]      In his affidavit in support of the application for leave to appeal out of time, Mr Te Rito states that it was not until January 2012 that he became aware that he had a right to appeal against conviction, and that he had a right to enter a not guilty plea to the charges.   Because of the quality of the legal advice he received earlier on regarding these matters, he contends that it would be a miscarriage of justice to permit the convictions to stand.  He also contends that his guilty plea was not a fully informed choice as it was based on the advice of a duty solicitor, which was given wrongly.

[8]      The Ministry cross-examined Mr Te Rito and in doing so established that Mr Te Rito understood the difference between pleas of guilty and not guilty, that he understood that in principle he could enter a guilty plea to the charges, and that he had spoken with a duty solicitor, who appears to have followed the standard procedures in the Duty Lawyer Service Operational Policy, before the guilty pleas were entered.  Thus, the Ministry contends that there are no special circumstances why the conviction should not stand.   However, when it came to whether or not Mr Te Rito understood that he could plead not guilty to the present offences in the sense that he had a good defence to them, the Ministry never challenged his evidence that this was not made clear to him at the time he entered his pleas.

[9]      The Ministry also cross-examined Mr Te Rito regarding certain accounts showing funds which the Ministry attributes to Mr Te Rito.  The Ministry relies on this  evidence  to  show  that  the  charges  against  Mr  Te  Rito  are  well  founded.

However, it is during the course of the cross examination that other facts emerged which raised concerns on my part regarding the decision to plead guilty.

[10]     Much of the evidence that the Ministry has relied on to show that Mr Te Rito had earned more than he had disclosed related to a registered company, Te Rito Arts Limited (the company), of which at the relevant times Mr Te Rito was the sole shareholder and director.   For example, the Ministry has copies of the company’s financial accounts, including a balance sheet showing that the company had assets of

$30,758 in excess of its liabilities.  During the course of the cross-examination, the Ministry sought to attribute these assets to Mr Te Rito.  However, the Ministry could not point me to any legal principle that permitted it to look through the corporate veil and to attribute assets of a registered company to its shareholder.   Unless such principles exist, the Ministry cannot treat the assets of $30,758 of the company as being the assets of Mr Te Rito: see Salomon v A Salomon & Co Ltd [1897] AC 22 (HC).

[11]     Nor do the company’s accounts show that Mr Te Rito received earnings by way of salary, directors’ fees or dividends from the company during the relevant time.   The shareholders current account shows that Mr Te Rito made drawings of

$14,401 for the financial year ending 31 March 2009, but they do not constitute earnings.  The drawings from a shareholder’s current account are an advance from the company to the shareholder, which the shareholder is legally liable to repay to the company.  Until such time as the company pays out formally declared payments to Mr Te Rito, either by way of dividend or a director’s fee which might then be applied to reduce or extinguish the liabilities arising from drawings from the shareholder’s current account, those liabilities remain alive.  As there is no evidence to suggest that any such payments were made to Mr Te Rito at the relevant time, there is no basis for treating the drawings of $14,401 as earnings in his hands.   It follows that he cannot have been under an obligation to disclose them as alleged in the charge of wilfully omitting to advise the Ministry of earnings received between 1

April 2008 and 10 February 2009.  Indeed, it is not even clear from the company’s accounts if the drawings were taken during the timeframe covered by this charge or some time later between 11 February 2009 and 31 March 2009.

[12]     Furthermore,  the  information  laying  this  charge  refers  to  Mr  Te  Rito’s omission to declare income he received from Te Rito Arts, and nothing is said about an omission to declare income received from the company.  Thus, the way in which the charge has been framed means that it cannot be understood as alleging an omission on the part of Mr Te Rito to declare income to the Ministry that he had received from the company.  Before the company was incorporated, Mr Te Rito had been running a business trading as Te Rito Arts.   Income earned by that business enterprise would be legally treated as income he received as the trading business, which, unlike the company, would have no separate legal personality.  But this would require the Ministry to be able to prove that Mr Te Rito had received income while trading in his own right as Te Rito Arts. There is no clear evidence to suggest this.

[13]     There is evidence of an amount of $2,976.40 that was deposited into an

account of Mr Te Rito’s trading as Te Rito Arts during the period 16 July 2008 to

31 August 2008.  This money went directly to Mr Te Rito.  He did not disclose it in the declaration which covered this period, nor did he otherwise advise the Ministry of its receipt.   However, he says it was a koha that he received and that he was, therefore, in accordance with Māori custom, obliged to repay it at some time in the future.   If that is so, the $2,976.40 would be best characterised as a loan and, therefore, he would not have been under any obligation to disclose it as earnings received.

[14]     When it comes to the charge of omitting to declare income received by Te Rito Arts, the character of the deposit of $2,976.40 is open to dispute.  But this seems to me to be the only sum of money that is relevant to proof of the wilful omission charge.

[15]     The charge of making a wilful and false statement to the Ministry regarding income  earned  is  based  on  the  allegation  that  the  false  statement  occurred  on

8 October 2008.  However, there is no evidence to prove that Mr Te Rito ever made such a statement on that date.  The Ministry’s evidence shows that it received from Mr Te Rito a “Work and Income Review” declaration, dated 1 October 2008, which covered the period for “52 weeks ending 10 Aug 2008”.  The Ministry has placed a date stamp of 8 October 2008 on this document but, without knowing more about

how the date stamp came to be placed on the document, no one can be sure that the document is proof of Mr Te Rito having made the declaration on 8 October 2008. All the evidence points to the declaration being made on 1 October 2008.  Since the company was not incorporated until 8 October 2008, there is no basis for saying that at  the  time  Mr Te  Rito  signed  the  declaration,  he  was  obliged  to  disclose  the company shares he held as an asset.

[16]     Regarding the deposit of $2,976.40 and its relationship with the charge of making a false statement regarding income earned over the previous 12 months, the problem  here  is  that  the  declaration  that  the  Ministry  relies  on  was  made  on

1 October 2008 and not 8 October 2008, so does not constitute evidence to prove that a false statement was made on 8 October 2008.  This evidential difficulty is in addition to the one already noted as to whether the money is a loan or income.

Appellate principles

[17]     This case raises questions regarding the application of the principles relating to: when leave to appeal out of time will be granted; secondly, what the approach should be on appeal; and finally, when a successful appeal against conviction can result from a guilty plea.

Application for leave to appeal out of time

[18]     Under s 116 of the Summary Proceedings Act 1957, the appellant must file a notice of appeal in writing within 28 days after the defendant has been sentenced. The Judge on appeal has a broad discretion to grant an extension under s 123(1) of the Summary Proceedings Act.

[19]     In Cleggs Ltd v Department of Internal Affairs HC Auckland M1032/84,

5 September 1984, the Court set out the following principles for an application for leave to appeal out of time to succeed:

(i)That the onus is on the applicant to show that there existed special circumstances why the decisions and sentences should not stand;

(ii)That the discretion was given essentially for the purpose of avoiding miscarriages of justice;

(iii)That all the circumstances of the particular case should be considered in deciding whether sufficient grounds had been shown; but

(iv)That one of the matters which must be established was that there was a real likelihood that an appeal would succeed if leave were granted.  Some authorities go so far as to say that the likelihood must be such that the applicant can establish the probability of success.

[20]   These principles have been recently affirmed in Virendra v Police HC Wellington CRI-2011-485-74, 27 September 2011 at [5]-[6], adding to that list the requirement for some explanation as to the reasons why the appeal has been filed late.

Approach to appeal

[21]     An appeal against conviction is by way of rehearing.  Section 121(2) allows the High Court to confirm the conviction, set it aside, or amend it.  According to Elias CJ in Austin, Nichols & Co Ltd v Stichting Lodestar [2007] NZSC 103, [2008]

2 NZLR 141 at [16]:

Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances, it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.

Appeal against conviction following entry of guilty plea

[22]     The Summary Proceedings Act contains no provision giving a defendant the right to withdraw his or her plea after sentence has been imposed.  After sentencing, the only way in which an offender can re-visit the entry of a guilty plea is by an appeal against conviction under s 115.

[23]     In Marino v Police HC Napier CRI-2007-441-27, 14 May 2008 at [12], the Court  stressed  that  the  circumstances  where  an  appeal  against  conviction  will succeed after a guilty plea are exceptional:

The general rule is that the Court will only entertain an appeal from a conviction following a guilty plea where there is evidence that a miscarriage of justice will result if the conviction is not overturned. The conviction cannot be set aside simply because the offender has repented his decision to plead  guilty  and  can  demonstrate  the  basis  for  a  defence.  Where  the appellant has fully appreciated the merits of his or her position and has made an informed decision to plead guilty, the conviction cannot be impugned even if there may have been a defence: R v Le Page at [16]; R v Stretch [1982] 1 NZLR 225 (CA).

[24]     The Court of Appeal in R v Le Page [2005] 2 NZLR 845 (CA) at [17]–[19] observed that three broad situations might indicate a miscarriage of justice. Normally, there will be either a material mistake or misapprehension on the part of the defendant affecting plea entry; the absence of a valid charge in law; or the entry of a plea through a wrong decision on a question of law.

[25]     The Court of Appeal in R v Merrilees at [34] noted that if trial counsel errs in his/her advice to an accused as to certain outcomes, thereby wrongly or negligently inducing the accused to plead guilty, that may justify vacating a guilty plea.   The question is whether the offender freely made the guilty plea on proper advice, where an offender knows what he is doing and is aware of the likely consequences, and of the legal significance of the facts alleged by the Crown ([35]).

[26]     A case relevant to duty solicitors in particular is Hall v R HC Nelson CRI-

2011-442-35, 20 October 2011.  Notably, Mackenzie J stated at [10]:

It  is  not  to  be  expected that  a duty solicitor  could,  in  the  limited time available for a consultation, take instructions in the level of detail that might be necessary for the giving of meaningful advice as to whether a plea should be entered, in a matter sufficiently serious that a sentence of imprisonment may be in contemplation. The responsibilities described in paragraph 10 of the operational policy suggests that legal advice sufficient for the entry of a plea should be confined to less serious matters where sentencing on the spot would be appropriate.

[27]     The Court also found that to constitute a fully informed choice, the defendant must first have been informed about the availability of legal aid and how to apply for it.  If the defendant knows this and still proceeds with advice from a duty solicitor, then  the  defendant  could  be  said  to  have  been  legally represented  by  the  duty solicitor.

Analysis

[28]     I am satisfied of the following:

(a)      The evidential foundation on which proof of the charges rested is equivocal;

(b)No competent solicitor who was aware of the nature of the Ministry’s evidence would ever have advised Mr Te Rito to plead guilty to the charges.   Indeed, to the contrary, I would have expected any such solicitor to give strong advice against doing so.  No such advice was given to Mr Te Rito;

(c)      I consider that given what occurred at the Manukau District Court, there is a sound evidential basis for inferring that the legal advice Mr Te Rito received was neither proper nor competent; and

(d)Had Mr Te Rito received proper competent legal advice, he would not have entered guilty pleas to the charges.

[29]     Further, I accept Mr Te Rito’s explanation regarding why the appeal was not filed on time.  He struck me as a credible witness and his evidence on this topic was not shaken or undermined in any way under cross-examination.

[30]     The  conclusions  I have  reached  on  the  weakness  of  the  Ministry’s  case against Mr Te Rito, the poor quality of the legal advice he received before he entered the guilty pleas and his explanation for the delay in filing the appeal lead me to conclude further that here:

(a)      There are special circumstances supporting him being granted leave to appeal out of time;

(b)      He has a good defence to the charges;

(c)      Much of the Ministry’s evidence to prove the charges is based on the apparently flawed assumption that it can attribute income/assets of the company to Mr Te Rito; and

(d)In  all  the  circumstances,  to  allow  the  convictions  to  stand  would amount to a miscarriage of justice.

[31]     I propose, therefore, to grant Mr Te Rito leave to appeal out of time and to allow the appeal.  Accordingly, the convictions entered in the District Court are set aside.

[32]     I now turn to deal with what should next occur.  First, there is the matter of the attribution of the company’s assets/income to Mr Te Rito.  This became a more important feature of the appeal during the course of the hearing.  The Ministry has acted as if it could treat Mr Te Rito and the company as one and the same person. When I asked the Ministry for the relevant legal authority for doing this, counsel could not refer me to anything.   Nonetheless, there may be some provision that achieves this effect.  Whilst I consider that Mr Te Rito may well have a defence on this basis, the Ministry should be given the opportunity to address the issue further, given the element of surprise for it at the appeal hearing.   Secondly, there is the deposit of $2,976.50 into Mr Te Rito’s bank account.  Whether this is a koha and, therefore, a loan rather than money he has earned is something that cannot be finally determined in this hearing.   For these reasons, I am satisfied that the charge of

wilfully omitting to declare income cannot be dismissed by this Court; instead, it should be referred back to the District Court for rehearing.

[33]     However, when it comes to the charge of making a false statement,  the difficulty the Ministry faces here is that the false statement it relies on was not made on or near to the date alleged in the information.  I consider that it is too late for the Ministry to be given the opportunity to amend the information to cover the period of

1 October 2008.  The charge is framed on the basis the false declaration was made “on or about 8 October 2008”.  The Ministry appeared to accept that the charge as laid in the information did not capture the declaration of 1 October 2008.   The Ministry did not argue that the phrase “on or about 8 October 2008” was wide enough to include 1 October 2008.  In the absence of argument to that effect, I am not prepared to assume that the wording of the information would cover an event on

1 October 2008.   It follows that I find that the conviction on this charge must inevitably fail for want of proof. This charge should be dismissed, and accordingly, I do so.

Result

[34]     Leave to appeal out of time is granted. [35]     The appeal against conviction is allowed.

[36]     The   charge   of   wilful   omission   to   declare   earnings   to   the   Ministry

(CRN 10004503119) is to be reheard in the District Court.

[37]     The  charge  of  knowingly  providing  false  information  to  the  Ministry

(CRN 10004503118) is dismissed.

Duffy J