The Queen v Donovan

[2007] NZCA 46

IN THE COURT OF APPEAL OF NEW ZEALAND

CA386/06
[2007] NZCA 46

THE QUEEN

v

JASON JOHN DONOVAN

Hearing:12 February 2007

Court:Arnold, Panckhurst and Priestley JJ

Counsel:P J Dale for Appellant

K Raftery for Crown

Judgment:6 March 2007 at 3 pm

JUDGMENT OF THE COURT

The appeal is dismissed.

____________________________________________________________________

REASONS OF THE COURT

(Given by Panckhurst J)

A challenge to a costs order

[1] After the appellant was acquitted at the conclusion of a District Court jury trial he sought costs in terms of the Costs in Criminal Cases Act 1967. The trial Judge, Judge Deobhakta, concluded that the police investigation of the case was inadequate and that an award of costs was justified. He awarded a sum of $10,000.

[2]       This appeal represents a challenge to the adequacy of the sum awarded.  Mr Dale maintained that the trial Judge erred in the exercise of his discretion, in particular because the defence placed its cards on the table in advance of trial and inadequate steps were taken to investigate the merits of the prosecution at that stage.  Further, counsel argued, the trial Judge gave no reasons for arriving at the figure of only $10,000, when the costs incurred in the context of a five day trial were in excess of five times that sum.

The background

[3]       The appellant was charged that in January-March 2002 he fraudulently took possession of a document capable of being used to obtain a pecuniary advantage (a cheque), forged the cheque (by drawing it for $32,000 and signing the signature of his former partner) and used the forged document (by cashing it).  A complaint to this effect was made to the police in March 2002.

[4]       The complainant was Mr Donovan’s former partner, Ms Chen.  She held the signing rights to a company account held with the Bank of New Zealand.  The gist of the Crown case was that Mr Donovan must have removed a cheque from the company cheque book while he and Ms Chen were still living together, that he subsequently forged her signature and then cashed the cheque on 28 March 2002. 

[5]       A handwriting expert gave evidence confirming that the signature on the cheque was forged.  Other details on the cheque were computer generated.  Although the police were advised that it may have been possible to ascertain whether such details emanated from a computer in the control of Mr Donovan (or one in the control of Ms Chen) neither computer was checked.

[6]       The appellant was interviewed in late May 2002.  The essence of his defence was disclosed at that interview.  He said that in January 2001 he was in a relationship with Ms Chen.  He loaned her $30,000 which she required in part for family purposes.  This sum was obtained by raising a mortgage over a property owned by Mr Donovan.  He said that Ms Chen paid interest on the advance by automatic fortnightly payments into his National Bank account.

[7]       The relationship failed in late 2001.  The appellant said that Ms Chen was unable to accept this, became vindictive and made constant phone calls to him, particularly at his place of work.  However, on 27 March 2002 Ms Chen repaid the loan.  The two arranged to meet at a McDonald’s restaurant, where the cheque was handed over.  Mr Donovan cashed it the next day, after signing the rear of the cheque and providing evidence of his identity.

Cards on the table

[8]       Following the deposition hearing in May 2004 counsel for the appellant wrote to the police (or the Crown Solicitor) on a number of occasions.  In June 2004  defence counsel supplied further details concerning the loan made to Ms Chen.  At the preliminary hearing she had denied the existence of the loan.  The police were requested to make inquiries of the Sky City Casino and of a bank in order to ascertain whether there was evidence to verify Mr Donovan’s belief that immediately after he advanced the $30,000 on 25 January 2001 a sum was paid by Ms Chen to the casino and a sum remitted overseas.

[9]       In January 2005 further disclosure was made by defence counsel.  Various points relevant to Ms Chen’s credibility were raised with the suggestion that the police should make further inquiries.  In addition, Mr Dale advised that Mr Donovan’s mother and sister were available witnesses and were able to confirm the existence of a $30,000 loan and that Ms Chen had said she would not repay the loan, since she was intent upon taking revenge for the breakdown in the relationship.  In addition, Mr Donovan’s then girlfriend was said to be able to verify the repayment of the loan on 27 March 2002, as she was an eyewitness to, although not immediately present at, the handover of the cheque.

[10]     By February 2005 the police officer in charge of the case was prepared to interview the intended defence witnesses.  To that end the District Court trial was adjourned.  However, interviews did not proceed, instead an exchange of letters occurred between Mr Dale and the prosecutor. 

[11]     Eventually in late July 2005 an arrangement was struck for the officer in charge to interview the three defence witnesses.  But in the end result this did not occur.  The officer interviewed the appellant’s girlfriend and viewed statements made by the other two witnesses, but he did not meet with them. 

[12]     The view was taken that much of the intended defence evidence was of a collateral nature and that the expert evidence that the cheque was forged before its presentation by the appellant, indicated the existence of a prima facie case.  The essential difference in the accounts provided by the complainant and the appellant was seen to require resolution by the jury.

[13]     These exchanges between counsel, and the police or the prosecutor, proceeded against the backdrop of written notice that if the case proceeded to trial and Mr Donovan was acquitted, an application for costs would inevitably follow.  Further, the correspondence was written on an open basis and with the warning that it may be used in the context of any costs application.

[14]     The trial was in October 2005.  At the conclusion of five hearing days Mr Donovan was acquitted on all counts in the indictment.  By then he had incurred legal costs and disbursements in the sum of $53,179.56 inclusive of GST. 

Judge Deobhakta’s costs decision

[15]     The Judge noted that a central theme advanced in support of the costs application was alleged failures on the part of the police to adequately investigate the complainant’s story.  He observed that Mr Donovan was no longer living with the complainant when the cheque was cashed and that, despite a document examiner’s suggestion that her computer also be examined (to see whether it generated the cheque), such was not done. 

[16]     With reference to the interviewing of defence witnesses the Judge referred to the background, in particular that Mr Donovan’s current girlfriend was eventually interviewed, but that neither his mother or sister were spoken to.  The Judge added:

To say that [their] briefs were full of hearsay evidence and therefore worthless was not an assessment to be made solely by the investigator.  I do not consider that it was a peripheral issue at all in the light of an allegation that the complainant was spiteful.

[17]     With regard to the evidence of an automatic payment from the complainant to the respondent in the sum of $108.46 per fortnight, which equated exactly with the interest commitment on Mr Donovan’s $30,000 bank loan, the Judge commented:

On the face of it, it seemed an odd amount for it to be a contribution to the household expense.  But the police seemed to have accepted that explanation [from the complainant] without scepticism.

[18]     The Judge’s final conclusion as to the adequacy of the investigation was expressed in these terms:

[12]     It is not alleged that the prosecution acted in bad faith in this case.  But in the end Mr Donovan was placed in the position that he had to establish each of the affirmative defences he had put forward in his initial interview with the police to obtain a verdict of “Not Guilty”.  Of course one can only speculate whether the verdict was because he had proved himself innocent or whether the jury gave him the benefit of doubt.  But in my view the investigations in this case were inadequate and the evidence upon which it was founded was not properly scrutinised by the police to Mr Donovan’s detriment.

[19]     The Judge then referred briefly to the relevant principles which inform a costs decision of this nature and expressed himself satisfied that it was just and reasonable to make an order towards the costs incurred by the appellant.  He continued that it was always “difficult” to calculate what award should be made.  Judge Deobhakta concluded that he should focus upon the $37,000 bill incurred in relation to the five day trial, since this was the expense which arose when the prosecution was on notice as to the detail and strength of the defence case.  Before us Mr Dale did not challenge this approach.

[20]     After reference to s 13(3) of the Act, which empowers a court to exceed the scale provided in the Costs in Criminal Cases Regulations 1987 if the special difficulty, complexity or importance of the case makes that desirable, the Judge said:

… I accept that the nature of the allegations and the burden placed upon [Mr Donovan] to establish his innocence meant he had to call a significant body of affirmative evidence making it slightly more difficult than an ordinary case of the kind.  Having regard to those matters I propose to award Mr Donovan a global sum of $10,000 inclusive of GST.

No point was taken by Mr Raftery arising from the fact that the Judge described this case as “slightly more difficult” than normal, whereas s 13(3) requires a finding of “special difficulty”.

The issues on appeal

[21]     Given that the Judge both made a finding that the police investigation was inadequate, and awarded costs of $10,000, on what basis is it said that the costs discretion was wrongly exercised in this instance?  Mr Dale rightly accepted at the outset of his written submissions that he must demonstrate reliance on a wrong principle, failure to take account of some relevant matter (or account taken of an irrelevancy), or show that the decision was plainly wrong. 

[22]     This Court has described the discretion conferred by s 5 as being “in very broad terms” and has said that it should not be narrowed by reference to the factors in s 5(2) (Solicitor-General v Moore [2000] 1 NZLR 533 at [30]-[33]. The discretion must, however, be exercised in a principled fashion (Shirley v Wairarapa District Health Board [2006] 3 NZLR 523 (SC) at [15]-[16].

[23]     We note that Mr Dale’s submission continued in the vein that the Judge gave “inadequate weight” to three factors, being the extent of the investigative failings, the public interest in ensuring that the prosecution properly fulfils its obligations and the size of the costs incurred by Mr Donovan.  Of course the weight to be given to relevant factors is not the proper focus of this Court, unless it can be said that thereby the decision is plainly wrong.  But we see the real thrust of counsel’s argument to be a contention that the decision reached was plainly wrong.

[24]     Although the appeal is necessarily directed to the quantum of the award, Mr Dale urged us to revisit the Judge’s finding of investigative failure and to conclude, in effect, that it too was plainly misplaced.  Counsel also contended that the Judge failed to recognise a legitimate role of a costs award in ensuring proper investigation conduct.  Further, he argued that the $10,000 award effectively represented a figure plucked from the air and that it was, therefore, unsupported by reasons.

Proper steps to investigate?

[25]     The argument under this heading suffered from the difficulty that the trial Judge made a finding (that the investigation was inadequate), which is now challenged effectively as to its emphasis and extent.  This Court does not enjoy the advantage which the trial Judge did in presiding at the trial and in seeing and hearing the witnesses. 

[26]     Mr Dale advanced the appeal on the basis that the proper award of costs was $37,000, being the actual costs incurred for the trial itself and therefore after the defence had placed its cards on the table.  We suggested to him that in order to disturb the Judge’s finding as to the extent of the investigative failure, it would be necessary to show that the defence cards were sufficiently compelling as to require a reasonable prosecutor, once placed on notice, to discontinue the case.  Otherwise, an award of indemnity costs would be difficult to justify.

[27]     However, Mr Dale was not disposed to adopt this suggestion.  He submitted that there had been an abject failure on the part of the prosecution to investigate matters which cast doubt on the credibility of the complainant, such that it was appropriate to award indemnity trial costs as a sanction, or to express disapproval, of the way in which the prosecution was conducted. 

[28]     We at least accept that a close focus upon the investigation process was necessary in this instance.  Subsection 5(2) confirms that in deciding whether to grant costs, and in fixing the amount of costs awarded, particular circumstances to be taken into account include:

(c)Whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty;

(d)Whether generally the investigation into the offence was conducted in a reasonable and proper manner;  and

(g)Whether the behaviour of the defendant in relation to the acts or omissions on which the charge was based and to the investigation and proceedings was such that a sum should be paid towards the costs of his defence.

Judge Deobhakta clearly had regard to these factors.  His various findings concerning deficiencies in the investigative process demonstrate as much, and from a reading of his decision it is clear he was well aware of the extent to which Mr Donovan provided information relevant to the defence case, and invited scrutiny of it.  The costs application was approached on the basis that the appellant’s behaviour was not a disqualifying factor.

[29]     We do not think that the trial Judge overlooked any matters.  He accepted that the police should have examined the computers of the complainant and the appellant and that all three defence witnesses should have been interviewed, not just one of them.  Likewise, he accepted that the complainant’s explanation for the fortnightly automatic payments should have been subjected to greater scrutiny.  But at the end of the day, with the distinct advantage of having presided at the trial, Judge Deobhakta reached an assessment as to the extent of the failings which we consider was open to him.  We conclude that it is not demonstrated that this assessment was plainly wrong.

Is the award itself challengeable? 

[30]     We shall examine this question with reference to two issues.  These are, first, whether the level of the award suggests the Judge failed to recognise that censure of inadequate investigative conduct is a proper function of a costs award.  And, second, whether the absence of reasons for arriving at the figure of $10,000 renders the decision susceptible to the characterisation that it is plainly wrong. 

[31]     It was implicit in Mr Dale’s argument that censure of police or prosecutorial conduct, by the imposition of a sanction to mark the Court’s disapproval, was an aspect of the Court’s jurisdiction to award costs under this Act.  No authority to that effect was cited.  Our own research of the New Zealand cases has proved unproductive. 

[32]     We accept that the proposition is not one to be dismissed out of hand.  The factors identified in s 5(2)(c) and (d) (see [28]) involve a focus upon the adequacy and reasonableness of the investigation.  It may be seen as a short step to the conclusion that censure, and the imposition of a sanction, may be appropriate considerations, at least in a case where the failings are egregious.  However, this is not the occasion to decide the point.  We have not heard full argument, and in any event the finding of Judge Deobhakta as to the extent of any investigative failings is not in the egregious category. 

[33]     With regard to the second issue, we do not regard the figure awarded as one reached without reasons, nor do we consider it to be plainly wrong.  The Judge set out a breakdown of the total costs incurred by the appellant.  He explained that in his view it was the trial costs which should be the subject-matter of any award.  In the end result he awarded a little over one-quarter of that figure.  The reasons for this final apportionment are not articulated.  However, the sense of the judgment is that the Judge assessed and brought to account the prosecution failings, concluded that it remained unclear whether the appellant was actually innocent or rather that he received the benefit of the doubt, and in light of this overall evaluation arrived at the $10,000 figure. 

[34]     We consider this process of reasoning unremarkable.  In reality it is often the case, particularly where an award in excess of scale is made, that the figure arrived at is necessarily a matter of impression.  The figure of $10,000 is one which we see as within the range available to the Judge and which seems to us to meet the justice of the case.

Conclusion

[35]     For these reasons we are not persuaded that the Judge erred in the exercise of his discretion.  Therefore the appeal is dismissed.

Solicitors:
Grove Darlow & Partners, Auckland, for Appellant
Crown Law Office, Wellington