The Queen v Whimp

[2008] NZCA 405

IN THE COURT OF APPEAL OF NEW ZEALAND

CA523/2007
[2008] NZCA 405

THE QUEEN

v

BERNARD TERENCE WHIMP

Hearing:15 September 2008

Court:Robertson, Wild and Cooper JJ

Counsel:P B McMenamin for Appellant

B M Stanaway and K T Dalziel for Crown

Judgment:8 October 2008 at 11.30 am

JUDGMENT OF THE COURT

THE APPEALS AGAINST CONVICTION AND SENTENCE ARE DISMISSED.

____________________________________________________________________

REASONS OF THE COURT

(Given by Robertson J)

Introduction

[1]        The appellant stood trial in the District Court in Christchurch before Judge Abbott and a jury on fifteen counts: one of burglary, seven of removing records of a company in liquidation contrary to s 273 of the Companies Act 1993 (“the Act”), and seven of failing to comply with a notice in writing from a liquidator to deliver up company records, contrary to s 261 of the Act.

[2]        The appeal against conviction on the count of burglary is advanced on the basis that there was insufficient proof that the floor of the building in which the offence occurred was subject to a lease that the liquidator could terminate.  Further, that if such a lease did exist then the trial Judge erred in leaving it to the jury to determine whether reasonable notice of termination was given to the appellant.

[3]        In respect of the appellant’s failure to deliver up documents, it is submitted that there was no express or implied power to specify a time for delivery.  Finally, on all counts the appellant submits that there was insufficient proof that the documents founding the charges were in fact documents of Capital Management Services Limited (CMS) in liquidation, or other relevant companies.

[4]        In the course of the hearing, Mr McMenamin conceded that there could be no challenge to five of the charges of removing records of a company in liquidation in respect of documents which were subsequently returned to the liquidator.  They do not require further consideration.

[5]        Pre-trial, this Court heard an appeal (R v Whimp [2007] NZCA 111) on an issue involving the lawfulness of the search of premises on Level 8, 180 Manchester Street, Christchurch from which Henry Holdings (Huntly) Limited (HHL) and Barberra Holdings Limited (BHL – previously known as CMS) operated. We will refer to them throughout as HHL and CMS.

Factual background

[6]        The Official Assignee (OA) was appointed liquidator of HHL on 26 January 2004 and of BHL on 15 March 2004. 

[7]        On 16 March 2004, three employees of the OA went to Level 8 of the Manchester Street premises and indicated that they wanted records for HHL and BHL.  They scrutinised the premises (which had been the offices for a number of other businesses as well) and took what clearly related to the two companies in which they had an interest.  This was 21 Eastlight files and a computer.

[8]        That afternoon those three employees of the OA and two others returned.  They said they were going to check through everything else, and asked the people present to leave.  Steps were taken to ensure that when leaving they took nothing with them which could have related to BHL or HHL.

[9]        The OA staff members made a list of various items, secured the building and had the locks changed.

[10]     Before the OA staff members returned, Mr Whimp telephoned the OA and said he had been back to the building and taken what he needed.  Later on, the OA found that about 50% of the material which had been identified as records relating to BHL and HHL had been removed overnight.

[11]     A notice dated 18 March 2004 was served on Mr Whimp under s 261 of the Act requiring him to deliver up all documents relating to the two companies by 9 am on Friday 19 March 2004.  On 23 March 2004 Mr Whimp delivered up a small number of relevant documents.

[12]     Mr Whimp was charged with burglary (in relation to his having returned to the premises which were locked and secured over that night), the removal of documents and for his failure to deliver up all relevant items when demand was made.

The burglary charge

[13]     The heart of this appeal is an argument by the appellant that there was a failure to prove a lease held in respect of Level 8, 180 Manchester Street, Christchurch, and that this evidential gap is fatal to the appellant’s convictions.

[14]     No lease document was produced at the hearing.  No evidence was given as to why it was not produced, or whether such a document existed.  Mr McMenamin suggested that the evidence of Ms Coates (who was at the relevant time an employee of the OA) established its existence.  We are not persuaded that is the case.

[15]     Mr Stanaway advised from the Bar that he was informed no lease was ever available, or found in the records to which the OA and his staff had access.  He accepted that there should have been evidence called about this.  Our task is to assess the evidence that was produced.

[16]     Mr McMenamin’s argument was that in the absence of a lease document there was a break in the essential chain of proof that CMS had a lease enforceable by the OA under the liquidation.  Therefore there was no evidence of a legitimate basis upon which the OA could prevent entry into the premises.

[17]     Although it does not determine the question currently before us, it is interesting that in the previous pre-trial hearing in this Court there was no dispute about the lease and it was noted at [5] that:

The premises were owned by McFarlane Buildings Limited and leased to CMS.  The evidence available was inadequate and unsatisfactory as to the status and position of other entities or individuals, but for the purposes of the appeal it has been accepted that others were using the premises pursuant to undefined bare licences.

[18]     Rhys Cain, the Regional Manager (South Island) of the New Zealand Trustee and Insolvency Service (which forms part of the business services branch of the Ministry of Economic Development) who held the designation as Official Assignee for the South Island said “it was established that CMS was the leaseholder of Level 8, 180 Manchester Street” and in his brief of evidence continued:

Enquiries that had been made with the landlord of 180 Manchester Street had revealed that he was intending to evict the occupants of level 8, 180 Manchester Street the next day as a result of unpaid rent.

On learning that the occupants of level 8 were to be evicted the next day and also because of my concerns over the security of the documents and computers located on the premises, I advised the landlord Angus McFarlane that I would evict the occupants that afternoon, the 16^th of March 2004, to protect the liquidators’ interests, namely the business records and computers located on the premises.

[19]     Relevant cross examination of Mr Cain was:

Q        Alright.  Now, what do you consider was your authority to do that?

AI was the liquidator of the company that was the lessee of the premises.

Q        You hadn’t actually seen a lease, is that right?

AI had it confirmed to me by the landlord that the company was the lessee.

QYou can’t actually tell us what the landlord said?  So you perceived your authority to come from your status as liquidator?

A        Correct.

Q        Or your status as tenant.  At that time, what did you think?

A        Well, as liquidator of the company that was the tenant.

[20]     Earlier, Mr Cain had said in cross-examination:

QAs a result of that she said she spoke to a Mr McFarlane who, it is alleged, was the landlord.  Did you also speak to Mr McFarlane?

AYes I did.

QDid you ever sight a lease?

AOn the 16^th [sic] April?

QNo, at any stage.

AI may well.  I can’t recall now.

QYou don’t know?

AI certainly didn’t on the 16^th.

QYou wouldn’t obviously be able to tell us then if you can’t remember whether you did it or not any of the clauses, the landlord, the tenant, the commencement date, expiry date, rental, things like that?

ANo

QClearly that lease has not been produced in evidence today.  You are aware of that?

ANo

[21]     Joanne Coates on this issue said, in cross examination:

I can tell you there was a lot of correspondence on Capital Management letterhead.  Quite a substantial amount of that related to the tenancy of the building, correspondence with the landlord.

…

During the course of that we discovered of course we were the tenant or Capital Management Services was the tenant holding the lease on that premise, so that meant that we had further discussions with the landlord as to what we would do next.

…

QNow, the other thing that you stumbled across at lunchtime was documentation that suggested to you that Capital Management Services Limited was not only an occupier of those premises, but was in fact the tenant?

AThat’s right.

QAnd you took the view, did you, that because of that you were able to go back to the premises and perform a further search?

AFrom the documents that we saw, there was correspondence back and forth between Capital Management and the landlord, which identified the landlord for us.  Um, the correspondence was of a nature that Capital Management was about to be evicted for non-payment of rent over some months.  From that I telephoned the landlord, he confirmed that in actual fact his secretary was at the moment typing an eviction notice and that he would be more than happy that if given the tenancy belonging with the Official Assignee, that we effected that eviction, rather than him proceeding.

…

QSo manifestly the people and companies were there with the consent of the tenant which was Capital Management Limited?

AI expect so, I don’t know whether there was any sublease arrangements.

…

QEffectively in the interim you took over the tenancy?

AThe liquidator, you know, owns all assets of the company, including the lease.

[22]     In addition, the Crown relied on a letter written by the appellant himself, on 15 May 2004, to the Insolvency and Trustee Service in Christchurch, which began:

You will be aware that Barberra Holdings Limited (previously Capital Management Services Limited) held a lease over these premises and that Barberra Holdings is in liquidation.

These premises were also the offices of a number of other companies and individuals.  Property belonging to these entities has not been returned and the companies/individuals concerned are aware that Mr McFarlane (the director of the company which owns the premises) is claiming to have purchased property belonging to these companies/individuals from the Official Assignee who is acting as liquidator of Barberra Holdings Limited.

[23]     Mr Whimp gave evidence but no issue was raised about the lease between the owner of the premises and CMS and nothing was done to put the existence of the lease in issue in any way.  In fact, as the cross examination revealed, the case for Mr Whimp was run on the premise that there was a lease and the witnesses were cross-examined on the basis that there was one.

[24]     We agree with Mr Stanaway that, in these circumstances, there was an ample evidential basis for the jury to conclude beyond reasonable doubt that the company in liquidation (CMS) was the lessee.

[25]     Mr McMenamin mounted a spirited and sustained argument rooted in the best evidence rule, contending that there had been a failure to comply with that rule or explain non-compliance.  He submitted that it would be a sorry day for the rule of law in New Zealand if an appellate court were to tolerate proof of a criminal indictment on evidence as flimsy as this.

[26]     The Evidence Act 2006 was not in force at the time of this trial and therefore the common law position under the Evidence Act 1908 is applicable.

[27]     The Evidence Act 1908/common law position on this point was summarised by Jonathon Parker LJ in Masquerade Music Limited v Springsteen [2001] CPLR 369 when he said at [85]:

In my judgment, the time has now come when it can be said with confidence that the best evidence rule, long on its deathbed, has finally expired.  In every case where a party seeks to adduce secondary evidence of the contents of a document, it is a matter for the court to decide, in the light of all the circumstances of the case, what (if any) weight to attach to that evidence.  Where the party seeking to adduce the secondary evidence could readily produce the document, it may be expected that (absent from special circumstances) the Court will decline to admit the secondary evidence and attach such weight to it as it considers appropriate in all the circumstances.  In cases falling between those two extremes, it is for the Court to make a judgment as to whether in all the circumstances any weight should be attached to the secondary evidence.  Thus, the ‘admissibility’ of secondary evidence of the contents of documents is, in my judgment, entirely dependent upon whether or not any weight is to be attached to that evidence.  And whether or not any weight is to be attached to such secondary evidence is a matter for the Court to decide, taking into account all the circumstances of the particular case.

[28]     Put another way, whether less than the best evidence will be accepted is a matter of fact and degree in the particular circumstances of the case.  This is a case where the appellant had made clear and unequivocal assertions.  His counsel cross-examined on the basis of the existence of a lease.  The terms of the lease and its finer details were immaterial to the case before the Court.

[29]     In all those circumstances, we are not persuaded that there was an absence of necessary evidence as to the position of the company as the tenant when it was put into liquidation.  The uncontroverted evidence available to the Court led to no other sensible conclusion.  The fact that CMS was the tenant was never an issue, but a narrative factor accepted by everyone in the District Court. 

[30]     Mr McMenamin made the point that Mr Whimp was not a director and/or shareholder of CMS and therefore the letter of 15 May written by him could be of no probative value.  When the evidence is read as a whole, that submission is clearly disingenuous.  Mr Whimp orchestrated all that was occurring and asserted authority. He cannot now seek to disassociate himself from the position he maintained and advanced outside the courtroom.

[31]     We are satisfied that the requisite status was properly proved and as a result of the liquidation, control of CMS vested in the OA who could then enforce CMS’s lease.  He was, thereafter, able to control who did or did not have access to the premises.

[32]     Having reached the clear conclusion that there was a leasehold interest, it is unnecessary and unhelpful to engage with Mr Whimp’s alternative argument as to whether CMS was in Level 8 by way of licence either with or without consideration.  We observe the possibility appears to be conjecture and speculation, but as the evidence demonstrated there was a lease, the possibility does not arise.

[33]     The second challenge to the proof of the burglary charge was that there was no reasonable opportunity given to vacate the premises.

[34]     With respect to Mr McMenamin, this argument is misconceived, being rooted in various decisions about a landlord being required to give reasonable notice to a tenant to vacate.  This case has nothing to do with the landlord.  It is a case in which the liquidator, by virtue of its control of the tenant company, could exercise the company’s rights under the lease.  That included the right to exclude Mr Whimp and others from the premises.

[35]     It is at the very essence of the arrangement that the OA took control of the assets of CMS.  It is not a case of an outside party intruding.

[36]     Mr McMenamin’s argument about whether reasonable notice was a question of law or fact simply does not arise in the circumstances of this case and if anything the trial Judge was generous in the manner in which he directed the jury on it.

[37]     The only complication was the fact that, as well as CMS and HHL operating from this level, there were a number of other companies in the premises in respect of which the OA was not involved.

[38]     The thrust of the evidence was that, until the position as to the records of those companies over which the liquidator had duty and responsibility was clarified, it was necessary for the premises to be totally vacated.  That is not unreasonable or inappropriate.   It was a practical means of dealing with a difficult situation.

[39]     When the summing up is read as a whole, there could be no possibility of a miscarriage of justice arising from the manner in which the Judge dealt with this point.

[40]     On the basis that CMS was the tenant, and the OA as liquidator had assumed control of CMS, priority was properly given to the OA’s duties.  An overnight freezing of the position in respect of other occupants (the status of which was not established) was, in the circumstances, not unreasonable or unlawful.

Removal of documents

[41]     The issue here is simply whether the jury were properly directed that on the basis of all the evidence they could be sure that some documents, (which belonged to the companies in liquidation), were removed overnight and that Mr Whimp was actively and knowingly involved in their removal.  Principally this was an issue of inference.  But, the jury was told by the Judge that it could be assisted by the evidence of people who had been on the premises on the first day, but had not been available to the OA staff when they returned the next morning following the documents’ removal.

[42]     We note that no particular challenge is made to Judge Abbott’s directions on inference, nor in his noting the other evidence which was available.

[43]     The Judge was at pains to point out where the onus lay and what the standard of proof was. The preliminary memorandum to the jury was corrected to direct that the removal had to be of documents which were “of a” company which was in liquidation and not merely “related to” such a company.

[44]     This is the count in respect of which there is a concession that five of the charges are unimpeachable.  We are satisfied the other two are as well.

Return of documents

[45]     The challenge to the convictions on the charges of failure to comply with the notice requiring the return of the documentation is similarly narrow.  It was contended that the Judge was in error in his direction as to the timeframe within which the return of documents was required to occur.  The notice initially required that the documents be returned by 9am on Friday 19 March.  After discussion between Mr Whimp and an officer of the OA, the delivery time was changed to midday on 19 March.

[46]     Section 261(1) of the Act provides that a liquidator may give notices in writing and s 261(6A) provides liability for a failure to comply.  It was contended that the notice given was unreasonable and that there was no agreement about the time for the return of the documents which was altered at the request of Mr Whimp.

[47]     This was a matter for the jury and the directions were appropriate to the circumstances of the case.

[48]     Before considering compliance with the notice, the jury would have reached the view that documents had been improperly taken by Mr Whimp.  Documents that had been improperly taken overnight were to be returned by noon on the day following service of the notice.  Those documents were immediately identifiable and there was no basis to argue that an extended period of time for compliance with the notice was required. 

Result

[49]     We are satisfied that, despite the wide-ranging submissions advanced by Mr McMenamin, the essential aspects of all counts were properly before the jury, the requirements of the law were clearly enunciated and there is no sensible basis for any concern with regard to any of the convictions.  The appeal against conviction is dismissed.

Sentence

[50]     The sentence appeal was restricted to the possibility that there would be convictions left only on some of the counts.  Mr McMenamin responsibly accepted that the penalty imposed for all the offending was clearly within discretion and could not be challenged.

[51]     The appeal against sentence is dismissed.

Solicitors:
K J McMenamin & Sons, Christchurch, for Appellant
Crown Law Office, Wellington