Wilson v Wellington District Court
[2023] NZHC 44
•31 January 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2022-485-450
[2023] NZHC 44
UNDER the Judicial Review Procedure Act 2016 IN THE MATTER OF
an application for judicial review
BETWEEN
DAVID NOEL WILSON
Applicant
AND
WELLINGTON DISTRICT COURT
First Respondent
GARY DOUGLAS MANN
Second Respondent
Hearing: 16 September 2022 Counsel:
G H Allan and H Worth for the Applicant
P J Gunn for the First Respondent (abiding, appearance excused) No appearance for the Second Respondent
A Markham, Counsel Assisting
Judgment:
31 January 2023
JUDGMENT OF GWYN J
Solicitors:
WCM Legal, Wellington Crown Law, Wellington
Copy to:
Ms Markham, Wellington
WILSON v WELLINGTON DISTRICT COURT [2023] NZHC 44 [31 January 2023]
TABLE OF CONTENTS
Background [4]
The criminal charge [11]
The evidence [17]
Judgment under review [29]
High Court injunction application [31]
Statutory scheme [35]
Grounds of review [36]
Is the decision amenable to judicial review? [37]
Discussion [45]
Merits of the judicial review application [50]
Evidence insufficient to justify a trial [51]
“Property” [58]
Discussion [66]
Possession or control of the property [69]
Discussion [73]
Terms or circumstances giving rise to any requirement/knowledge/intentional dealing [77]
Discussion [92]
Intentional dealing in breach of any requirement [97]
Discussion [100]
Conclusion in relation to evidential sufficiency [113]
Abuse of process [121]
Discussion [141]
Result [148]
Costs [149]
[1] The applicant, David Wilson, is charged in the Wellington District Court with an offence of theft by a person in a special relationship, contrary to s 220 of the Crimes Act 1961 (the charge). The charge against Mr Wilson was filed by the second respondent, Gary Mann, as a private prosecutor.
[2] Mr Wilson has applied to this Court for judicial review of the District Court’s decision under s 26 of the Criminal Procedure Act 2011 (CPA) to accept the charge for filing.
[3] Both respondents abide the application. Accordingly, Ms Markham has been appointed as counsel assisting the Court and to act as a contradictor.1
Background
[4] Mr Wilson and Mr Mann are former neighbours in Picton. Mr Mann ran a silo business from his home in Port Underwood Road (the Property). The Property is a Marlborough District Council (Council) leasehold estate and was owned by Mr Mann’s company, Silo Solutions New Zealand Limited (Silo). The Property was purchased with the assistance of a loan of $410,000 from a private lender, Isso Holdings Limited (Isso).
[5] The terms of the loan are set out in a Term Loan Agreement (undated), between Silo as the borrower and Isso as the lender. The loan securities included personal guarantees by Mr Mann, his wife Sarah Mann and his business partner Philip Henderson.2 Mr Henderson’s guarantee was “indirectly supported” by an executed Agreement for Sale and Purchase of the Property, between Silo as vendor and Mr Henderson and others “as trustees of the Fern Trust” as purchaser (the Sale and Purchase Agreement). The purchase price was $475,000.
[6] Under the Term Loan Agreement, on an event of default occurring, and at the option of Isso as the lender, Mr Henderson was obliged to procure the trustees of the Fern Trust to complete the purchase of the Property pursuant to the Sale and Purchase Agreement within 15 business days. Silo was required to consent to and cooperate
1 Wilson v Wellington District Court & Anor [2022] NZHC 2082 (Mallon J) at [7].
2 Mr Henderson was a 50 per cent shareholder in Silo.
fully in the purchase. The settlement proceeds were payable to Isso to be applied in payment of the arrears under the loan, with the balance (if any) to be paid to Silo.
[7] Mr Mann and Silo got into financial difficulty and fell into arrears on the loan to Isso. In late 2019 Mr Mann was facing bankruptcy. He spoke with his neighbour, Mr Wilson, about his difficulties.
[8] Mr Mann alleges that Mr Wilson agreed to help him, and they discussed a proposal whereby Mr Wilson would buy the Property from Silo for $420,000, on the condition that Mr Mann or Silo could buy it back when they were in a position to do so. In the meantime, Mr and Mrs Mann could continue to live in the Property. Mr Mann agreed that Mr Wilson could communicate with Isso for this purpose.
[9] Mr Mann says that in fact Mr Wilson went behind his back and on 17 December 2019, through his own company, Wilson Properties and Accounting Limited (WPA), entered into an agreement with Isso to take over its rights and obligations under the Term Loan Agreement. On 17 December 2019 Isso assigned the loan agreement and related securities to WPA for the then outstanding loan balance of $222,430.71.
[10] On 23 December 2019 WPA issued a payment demand for arrears under the loan (notice of demand). On 9 January 2020 WPA appointed a receiver, John Scutter, who took steps to sell the Property.
The criminal charge
[11] Sometime in late 2021 a criminal charge was filed against Mr Wilson in the Wellington District Court (the charging document). The charging document names “New Zealand Commercial Law Corp Limited- David Hayes, Barrister” as the prosecutor and it as signed by Mr Hayes. The document names Mr Mann as the person with “good cause to suspect” that Mr Wilson had committed the alleged offence.
[12] The charge is brought under ss 220 and 66 of the Crimes Act 1961. The offence description is that, on or before 15 June 2020:
The Defendant, aided and abetted Wilson Property and Accounting Ltd (WPA), when WPA was is [sic] in control of property, in circumstances where
WPA was required to deal with the property in accordance with the requirements of other persons; and failed to do so.
[13] Under “particulars”, the “property” is said to be the Agreement for Sale and Purchase. Mr Mann alleges in the charging document that WPA intentionally failed to deal with the property in accordance with the requirements of other persons and failed to recover the $475,000 available.
[14] The essence of the allegation in the charge is that Mr Wilson, as the sole director and controlling mind of WPA, was required to invoke the additional security given by Mr Henderson and recover $475,000 via the Agreement for Sale and Purchase. Instead, Mr Wilson recovered only $370,000 through the appointment of a receiver and the sale of the Property. The difference of $105,000 is alleged to constitute a loss to Silo.
[15] On 13 December 2021 the charging document was referred to Judge Sainsbury under s 26 of the CPA. The Judge issued a direction in which he noted his concern about evidential sufficiency in relation to the charging document, referring particularly to the fact the sale of the Property was conducted by Mr Scutter as receiver and not by WPA. The Judge directed Mr Mann to file such further statements (and any accompanying exhibits) that Mr Mann proposed to call at trial. The Judge’s direction noted:3
One specific concern is that I do not see how the claimed special relationship under s 176 of the Property Law Act 2007 can have arisen, when the sale was exercised not by the mortgagee, but by the receiver. Therefore, the duty to obtain a reasonable price would have, in my preliminary assessment, arisen under s 19 of the Receiverships Act 1993 and be binding not on the proposed defendant, but the receiver himself.
Without that duty, there can be no special relationship which is, of course, a critical ingredient in the charge of theft in a special relationship.
[16] Counsel for Mr Mann then filed further submissions dated 23 December 2021 and a second bundle of “Further Disclosure”.
3 Direction of Judge N J Sainsbury, 13 December 2021, at [5]–[6].
The evidence
[17] The prosecutor’s statement of facts alleges that Mr Wilson, as the sole director of WPA, “aided and abetted WPA to cause at least a $105,000 loss to [Silo], and a potential loss of $105,000 to Henderson, Gary Mann, Sarah Mann, and the trustees of Sedona Trust, as guarantors of [Silo’s] debt to WPA; - and loss to [Silo’s] creditors.” The statement alleges that Mr Wilson obtained a pecuniary benefit from the sale of the Property “in that the purchase price was $105,000 less than that readily payable by Henderson”. The prosecutor seeks restitution for that amount.
[18] The further submission of counsel for the prosecutor, filed on 14 October 2021, submitted that Mr Wilson “came into a position of confidence to Mann and SSL” and used that position of confidence to extract a pecuniary advantage. He did so with an exogenous purpose.
[19] In support of the charging document and the statement of facts, Mr Mann filed his own statement, together with a statement from Philip Henderson.
[20] In his statement Mr Henderson describes his agreement to purchase the Property for $475,000 (in his capacity as trustee of the Fern Trust) and to settle the sale within 14 days in the event of a default. Mr Henderson says the Sale and Purchase Agreement was “critical” to Silo getting lending from Isso, as evidenced at cl 4(e) of the Term Loan Agreement, headed “Condition Precedent”. Silo could not draw funds until that agreement was in place.
[21] Mr Mann confirms that, despite being able under the Term Loan Agreement to immediately call upon Mr Henderson from 23 December 2019 onwards to purchase the Property, and settle the purchase within 14 days, to have their entire debt repaid (with a substantial surplus left over), WPA did not do so.
[22] WPA appointed Mr Scutter as receiver on 9 January 2020 to recover the debt of $222,430.17 plus interest of approximately $20,000.
[23] On 29 May 2020 Mr Henderson emailed a letter to Mr Scutter advising him that pursuant to his interest in the equity of redemption, he wished to redeem the
assigned loan/security, and was ready, willing and able to purchase the Property for
$475,000, as contracted for between Isso and Silo and Henderson in the loan/security documents.
[24] On 9 June 2020 Mr Scutter replied to Mr Henderson advising that his offer to redeem was at the option of WPA and would not be taken up by WPA. Mr Henderson confirms that at all times between the time WPA took its assignment from Isso, until the receiver actually sold the Property, he was ready, willing and able (in his capacity as trustee of the Fern Trust) to purchase the Property for $475,000 and to settle the sale and purchase within 14 days.
[25] Also on or about 9 June 2020 a conditional sale and purchase agreement for the Property was signed by Mr Scutter to Mr Wilson and Mrs Wilson for $370,000, on the condition that the Council assign Silo’s lease to Mr and Mrs Wilson.
[26] As Mr Mann notes in his statement, the receiver sold the Property to Mr and Mrs Wilson for $370,000.
[27] On 15 June 2020 the Council assigned Silo’s lease to Mr and Mrs Wilson, thereby satisfying their condition of purchase and completing the receiver’s sale.
[28] On about 15 June 2020 the receiver paid $200,000 to WPA as a recovery under the Term Loan Agreement. Mr Mann says: “David Noel Wilson and his wife benefitted in that the purchase price was $105,000 less than that readily payable by Henderson. On 17 June 2020 WPA demanded payment of $72,548.76 from the guarantors being myself, Henderson, Sarah Mann, and the trustees of Sadona Trust”.
Judgment under review
[29] On 23 May 2022 Judge Sainsbury issued a Further Direction (in the form of a reserved judgment) in which he directed the charge be accepted for filing (the decision). The Judge noted that he had “reservations about each of the arguments advanced [for Mr Mann]”, but considered that the role of the s 26 screening process
is not “to conduct an imaginary trial or to conduct exhaustive or complicated legal research as to the underlying legal position”.4
[30] The Judge referred to the likelihood of Mr Wilson making an application under s 147 of the CPA (Dismissal of charge) and noted that the availability of this option “is in no small part a factor I have relied upon in determining that he [Mr Wilson] will not be prejudiced by the charging document being accepted for filing.”5 In conclusion the Judge noted that “[t]here is not anything in the circumstances that marks this out as an abuse of process”.6
High Court injunction application
[31] On 8 April 2020 Mr Mann sought an injunction in the High Court preventing the sale process, challenging the validity of both the Deed of Assignment and the notice of demand. Mr Mann also alleged that Mr Wilson was in breach of the obligation of good faith under s 25 of the Personal Property Securities Act 1999.
[32] Mr Mann’s application was heard on 16 April 2020 and in a judgment dated 17 April 2020,7 Cooke J considered a number of submissions, including Mr Mann's reliance on s 25 of the Personal Property Securities Act 1999. Section 25 provides:
25 Rights or duties that apply to be exercised in good faith and in accordance with reasonable standards of commercial practice
(1)All rights, duties, or obligations that arise under a security agreement or this Act must be exercised or discharged in good faith and in accordance with reasonable standards of commercial practice.
(2)A person does not act in bad faith merely because the person acts with knowledge of the interest of some other person.
[33]The Judge summarised Mr Mann’s claim in the following way:8
[23] The complaint is based on Mr Wilson taking unfair advantage of the company by obtaining information through the personal connection with Mr Mann and his son at a time when the company was vulnerable. It is said that Mr Wilson has engaged in a plan to acquire a neighbouring property with the result that Mr Mann is left personally exposed as a guarantor in
4 Further Direction of Judge N J Sainsbury, 23 May 2022, at [26].
5 At [6].
6 At [34].
7 Mann v Scutter [2020] NZHC 755.
8 At [23].
circumstances where he and his family may become homeless at a time when there is uncertainty about finding another home.
[34] Justice Cooke found there was no arguable case for the application of s 25 and affirmed WPA/Mr Wilson’s right to exercise the power of sale of the Property.
Statutory scheme
[35] While any person may commence a proceeding,9 a private prosecution is subject to s 2610 which states:
26 Private prosecutions
(1)If a person who is proposing to commence a private prosecution seeks to file a charging document, the Registrar may—
(a)accept the charging document for filing; or
(b)refer the matter to a District Court Judge for a direction that the person proposing to commence the proceeding file formal statements, and the exhibits referred to in those statements, that form the evidence that the person proposes to call at trial or such part of that evidence that the person considers is sufficient to justify a trial.
(2)The Registrar must refer formal statements and exhibits that are filed in accordance with subsection (1)(b) to a District Court Judge, who must determine whether the charging document should be accepted for filing.
(3)A Judge may issue a direction that a charging document must not be accepted for filing if he or she considers that—
(a)the evidence provided by the proposed private prosecutor in accordance with subsection (1)(b) is insufficient to justify a trial; or
(b)the proposed prosecution is otherwise an abuse of process.
(4)If the Judge determines under subsection (2) that the charging document should not be accepted for filing, the Registrar must—
(a)notify the proposed private prosecutor that the charging document will not be accepted for filing; and
(b)retain a copy of the proposed charging document.
(5)Nothing in this section limits the power of a Registrar to refuse to accept a charging document for want of form.
9 Criminal Procedure Act 2011, s 15.
10 Criminal Procedure Act.
Grounds of review
[36] This application for judicial review is made on the grounds that the District Court Judge ought to have declined to accept the charge for filing under s 26 because the evidence provided by the proposed prosecutor, Mr Mann, is insufficient to “justify a trial” (s 26(3)(a)) and the proposed prosecution is an abuse of process (s 26(3)(b)).
Is the decision amenable to judicial review?
[37] While there is a right to judicial review under the New Zealand Bill of Rights Act 1990 (Bill of Rights)11 and pre-trial decisions of the District Court are as a matter of course amenable to review, there is a longstanding principle that judicial review should be exercised sparingly in relation to the exercise of the District Court’s criminal jurisdiction.12
[38] In DGN v Auckland District Court Simon France J considered a line of cases, including Polynesian Spa Ltd v Osborne,13 confirming the reluctance of the High Court to intervene by way of judicial review in a District Court decision to prosecute.14 Justice Simon France observed that the introduction of the CPA, with its provision for “carefully crafted appeal rights”,15 reinforces the “existing reluctance of the courts to allow judicial review to interrupt the conduct of criminal prosecutions”.16
[39] As Mr Allan for the applicant noted, DGN and the cases cited in that judgment concerned judicial review of the exercise of the executive prosecutorial discretion. Mr Allan emphasises that there is no right of appeal from a decision under s 26 to accept a charging document for filing. In his submission the DGN approach is not necessarily appropriate in the case of a private prosecution, because of the impact of a private prosecution and the place of s 26 in the statutory scheme. Mr Allan referred to a number of authorities in support of that submission.
11 New Zealand Bill of Rights Act 1990, s 27(2).
12 Auckland District Court v Attorney-General [1993] 2 NZLR 129 (CA) at 136.
13 Polynesian Spa Ltd v Osborne [2005] NZAR 408 (HC).
14 DGN v Auckland District Court [2016] NZHC 3338, [2018] NZAR 137 at [29].
15 At [28].
16 At [29].
[40]In Goodman Fielder v Hall’s Refrigerated Transport Ltd, Cooke J said:17
The ability for private persons to bring private prosecutions is regarded as an important safeguard against the monopoly otherwise exercised by the State on decisions to initiate prosecutions. But equally it is recognised that allowing private prosecutions as of right could allow them to be initiated inappropriately.
[41] In Goodman the High Court cited18 the Law Commission’s March 1997 Preliminary Paper on Criminal Prosecution where it said, “The decision to begin a prosecution against an individual has profound consequences.”19
[42] Similarly, in H Construction North Island Ltd v Siew, Whata J said about s 26:20
… this also brings into focus the importance of the screening exercise. While a private prosecutor is not directly engaged in an exercise of discretionary public power, s/he or it is deploying the power and machinery of the State to enforce criminal law and penalise criminal wrongdoing. Close scrutiny of the sufficiency of the evidence is required to ensure that there is a proper basis for this deployment.
[43] The Supreme Court in S (SC 58/2019) v Vector (an appeal from H Construction), said of s 26:21
… the availability of the private prosecution mechanism serves an important purpose. But it is equally clear that private prosecutions allow non-state entities or individuals to … deploy ‘the power and machinery of the State to enforce criminal law and penalise criminal wrongdoing’.
[44] Ms Markham, counsel assisting, submits there is no reason to depart from the DGN approach. In her submission the appropriate process is for the defendant to bring an application under s 147 of the CPA for dismissal of the charge(s) against him.
17 Goodman Fielder v Hall’s Refrigerated Transport Ltd [2019] NZHC 599, [2019] NZAR 489 at [14].
18 At [14].
19 Law Commission Criminal Prosecution (NZLC PP28, 1997).
20 H Construction North Island Ltd v Siew [2018] NZHC 2327 at [53].
21 S (SC 58/2019) v Vector [2020] NZSC 97, [2021] 1 NZLR 1 at [127] (footnotes omitted).
Discussion
[45] In Vector the Supreme Court observed that s 26 makes “provision for inappropriate private prosecutions to be weeded out.”22 The Court agreed with counsel that s 26 provides “the first stage of a legislative process which ensures a defendant is not vexed or improperly subject to sanction through the criminal justice process”.23
[46]The Supreme Court also noted that s 26:24
provides a straightforward mechanism to ensure that obviously unmeritorious or abusive private prosecutions do not get underway. It operates as an initial screening mechanism to filter out a proposed private prosecution either because the proposed prosecutor’s evidence is insufficient, or because the proposed prosecution is an abuse of process.
[47] A private prosecution is not directly analogous to a prosecution brought under the executive prosecutorial discretion. As the decisions in Vector, Goodman Fielder and H explain, a private prosecutor is deploying the power and machinery of the State to enforce the criminal law. A private prosecutor is not subject to the same constraints, such as the Solicitor-General’s Prosecution Guidelines, that apply to prosecutions carried out by or on behalf of the Crown. As Cooke J identified in Goodman Fielder, allowing private prosecutions as of right could allow them to be initiated inappropriately. The very purpose of s 26 is to act as a check or a screening process on that private prosecutorial discretion. Because of its specific purpose I do not think the concerns identified by Simon France J in relation to the CPA’s “carefully crafted appeal rights” arise in the same way.
[48] I accept that it is no answer to inappropriate private prosecutions to say the defendant can apply under s 147 of the CPA. In order to access s 147 the individual has to have become a defendant. That is, he or she has become part of the criminal justice process and is already potentially subject to the “profound consequences” to which the Law Commission referred.
22 At [47].
23 At [65].
24 At [89].
[49] I conclude that it would be contrary to the purpose of s 26 to apply a rigid rule preventing judicial review of a decision under s 26 except in exceptional circumstances. I am persuaded that the particular circumstances of this case mean that the applicant’s judicial review application should be considered.
Merits of the judicial review application
[50] I turn then to consider the merits of the application for judicial review. The application relies on both lack of evidential sufficiency and abuse of process.
Evidence insufficient to justify a trial
[51] The leading authority on the test to be applied by a District Court Judge under s 26 is S (SC 58/2019) v Vector Ltd.25 As the Supreme Court unanimously held “the threshold for determining evidential sufficiency is whether, on a prima facie basis, the evidence is sufficient to prove the elements of the charge to the required standard.”26 Judge Sainsbury applied that test.27
[52] The charge brought against Mr Wilson is theft by a person in a special relationship, under s 220 of the Crimes Act. The required standard is the criminal standard of beyond reasonable doubt.
[53]The applicant says there is insufficient evidence to justify a trial on that charge.
[54]Section 220 of the Crimes Act provides:
220 Theft by person in special relationship
(1)This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a)to account to any other person for the property, or for any proceeds arising from the property; or
(b)to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
25 S (SC 58/2019) v Vector Ltd, above n 21.
26 At [6].
27 Further Direction of Judge Sainsbury, 23 May 2022, at [13]–[16].
(2)Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3)This section applies whether or not the person was required to deliver over the identical property received or in the person’s possession or control.
(4)For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.
The elements of s 220 are set out in Tallentire v R:28
(a)Did the accused have control over property?
(b)Was the property in the control of the accused in circumstances that required him to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person?
(c)Did the accused know of those circumstances?
(d)Did the accused intentionally deal with the property or any proceeds of the property, otherwise than in accordance with those requirements?
[56]Dishonesty and a pecuniary advantage are no longer elements of s 220.
[57] Judge Sainsbury applied the four-step analysis from Tallentire v R.29 “Property”
[58] Judge Sainsbury records that Mr Mann identified the “property” for the purpose of s 220 as the Sale and Purchase Agreement.30 The Judge did not separately consider what constituted property for the statutory purpose.
[59] Mr Allan says that “property” falling within the ambit of s 220 must be extant property that satisfies the definition of “property” under s 2(1) of the Crimes Act:
28 Tallentire v R [2012] NZCA 610.
29 Further Direction of Judge Sainsbury, 23 May 2022, at [12].
30 At [19].
property includes real and personal property, and any estate or interest in any real or personal property, money, electricity, and any debt, and any thing in action, and any other right or interest
[60] Section 218 addresses “matters of ownership” for the purposes of Part 10. Implicit in s 218 is the requirement that stolen property have an “owner” (against whom theft might be committed).
218 Matters of ownership
(1)For the purposes of this Part, a person is to be regarded as the owner of any property that is stolen if, at the time of the theft, that person has
–
(a)possession or control of the property; or
(b)any interest in the property; or
(c)the right to take possession or control of the property.
(2)An owner of any property may be guilty of theft against another owner of that property.
[61] The charging document particularises the relevant property as the “sale and purchase agreement of leasehold land and buildings owned by Silo Solutions New Zealand Ltd (Picton), with a known value of $475,000”. This is the sale and purchase agreement referred to at [5] above, being the agreement between Silo and the Fern Trust that the Fern Trust would purchase the leasehold interest in the Property should Silo default under the loan.
[62] Mr Allan submits that an unconditional agreement for sale and purchase of land might confer an equitable interest in land, which interest would then constitute “property”. Here, however, the particulars of the charge do not allege failure to deal with an equitable interest in land, but a failure to deal with an agreement. Mr Allan also submits that, even if the charge is construed as encompassing any interest in land that might be conferred under the Sale and Purchase Agreement, no such interest is conferred. The agreement does not concern the sale of land, rather it concerns the assignment of a lease; regardless, the agreement was not, at law, unconditional: the terms of lease required the lessor Council to consent to any transfer of the leasehold estate, which consent had not been obtained.
[63] The further submission for the applicant is that the substance of the charge is one of loss of unrealised gain. The underlying allegation is that, by not inviting Silo
to seek to enforce its agreement with the Fern Trust, the applicant set in train a course of events that caused Silo, under receivership, to sell the leasehold land at an alleged undervalue, thereby allegedly causing loss in the form of unrealised sale proceeds. The charging document particularises this as the suffering of a loss to the extent of the alleged undervalue ($105,000). Mr Allan says that the memoranda of counsel filed in support of the charging document hinges off this allegation of loss.
[64] The applicant says unrealised profit is not extant property capable of satisfying the definition of “property” under the Crimes Act and there cannot be any “dealing” in or any failure to “account” for (or, indeed, any “owner” of) property that is purely prospective, such as allegedly unrealised profit. In any event, there can be no prospect of proving beyond reasonable doubt that Silo even “suffered a loss” of unrealised profits. The alleged loss is not only prospective but speculative.
[65] Ms Markham acknowledges that there is some conceptual difficulty in defining the relevant “property”, given that what is at issue is not the Sale and Purchase Agreement itself, but the underlying rights and interests. Counsel notes that this could conceivably be addressed by an amendment to the charge, refining the particulars, given that the Crimes Act definition of property is very broad, and non-exhaustive, and clearly includes a leasehold estate, or an interest in a leasehold estate.
Discussion
[66] The Term Loan Agreement provides that, on an event of default [defined in clause 10.1] and at the option of the lender (Isso/WPA) Mr Henderson will procure the trustees of the Fern Trust to complete the purchase of the Property from Silo.
[67] There is a disjunct between what the charging document and supporting documents say about what comprises the “property”. Although the charging document records the Sale and Purchase Agreement as being the relevant “property”, in substance, Mr Mann’s case is that the “property” is the right provided to WPA by cl 9(1)(l) of the Term Loan Agreement, to call upon Mr Henderson to procure completion of the conditional Sale and Purchase Agreement for the leasehold of the Property. The essence of the claim is that WPA was under an obligation to exercise that right and deal with that “property” in a particular way.
[68] The question of what is alleged to be, and what can lawfully comprise, property under s 220, becomes more acute when the next element of the offence (control) is considered, but I am not persuaded that there can be said to be a prima facie basis for this critical element of the charge, even if it were possible for some as yet unidentified amendment to be made to the charge.
Possession or control of the property
[69] The District Court Judge accepted that Mr Wilson could be said to have control over the property (earlier identified as the sale and purchase agreement) by virtue of being WPA’s sole director.31
[70] The Judge also found that “When ISSO assigned the loan to WPA, that included the ability to use the sale and purchase agreement to obtain repayment of the outstanding debt from Fern”.32
[71] The applicant says that regardless of whether the “property” is construed as connoting a physical agreement or a legal interest arising thereunder, there is no basis for any allegation that the applicant was ever “in possession of” or had “control over” such agreement or interest. Mr Wilson was not a party to the agreement between Silo and the Fern Trust.
[72] The applicant says that the Judge’s conclusion that WPA obtained the ability to use the Sale and Purchase Agreement to obtain repayment was wrong - the Sale and Purchase Agreement constituted “security” only to the extent it was (or, Mr. Allan says, purported to be) a binding contract between Silo and the Fern Trust that Silo – not ISSO/WPA – might then be able to enforce against the Trust.
31 At [20], citing Cullen v R [2015] NZSC 73, [2015] 1 NZLR 715 at [34]. “Property” is discussed at [19].
32 Further Direction of Judge N J Sainsbury, 23 May 2022, at [19].
Discussion
[73] WPA could have called on the personal guarantees given by each of Mr Mann, Mrs Mann and Mr Henderson, all of which were stated to guarantee the obligations of the Borrower (Silo), in favour of the Lender (Isso/WPA).
[74] WPA was not a party to the Sale and Purchase Agreement. WPA had no rights arising under the Sale and Purchase Agreement. It did not have legal control over the Sale and Purchase Agreement. WPA’s control extended only to those rights conferred on it under the Term Loan Agreement. That Agreement gave it an option - but not an obligation – to call on Mr Henderson and Silo to complete the Sale and Purchase Agreement pursuant to cl 9(1)(l) of the Term Loan Agreement. Mr Mann seems to say that WPA had effective control over the Sale and Purchase Agreement because it could have called for it to be completed it and Mr Henderson was ready, willing and able to complete it at all relevant times. Actual performance would then have been a matter for the trustees of the Fern Trust, and also for the Council, whose consent as lessor had not been obtained, but was necessary. However, WPA could not have compelled Mr Henderson or Silo to complete the Sale and Purchase Agreement. To that extent, it is doubtful whether WPA/Mr Wilson had legal “control” for the purpose of s 220, even on the basis that, as counsel assisting submits, control for the purpose of s 220 need not be exclusive control.33
[75] As the Court of Appeal said in Bublitz v R, “[u]nlike a ‘prudent and businesslike manner’ covenant, the concept of ’control’ has an absolute character. It permits only one correct answer; Mr Bublitz either had control as defined or he did not.”34
[76] I conclude that WPA/Mr Wilson did not have control of the Sale and Purchase Agreement which is alleged to be the relevant “property” for the purpose of s 220.
33 R v Douglas [2012] NZHC 1746 at [203], where the High Court endorsed a statement that a person can be in control of property if he or she can lawfully determine how it is applied.
34 Bublitz v R [2019] NZCA 364, [2019] 3 NZLR 533 at [57].
Terms or circumstances giving rise to any requirement/knowledge/intentional dealing
[77] There is a certain artificiality in going on to consider the other requirements of s 220 given my conclusion that there is insufficient evidence to establish a prima facie case in respect of the first two elements. However, for completeness I reach some general conclusions.
[78] The further elements are that WPA/Mr Wilson was required to deal with the property in accordance with the requirements of another (Silo, Mr Mann), knew of that requirement, and intentionally dealt with the property in breach of that requirement.
[79] The District Court Judge considered the potential for Mr Wilson to have been subject to a requirement to deal with the property in accordance with the requirements of others. The Judge set out the four arguments advanced by the prosecutor in support of the contention that Mr Wilson owed “fiduciary obligations” to the guarantors, Silo and Mr Mann, to recover the debt without disadvantaging the guarantors. These were, in summary, first, the circumstances surrounding WPA acquiring the loan meant that it had a fiduciary relationship with Silo and Mr Mann. Because of that, it was obliged to rectify the default in a way that did not cause unreasonable harm to Silo and Mr Mann.
[80] Second, while the use of the Sale and Purchase Agreement as security is expressed as able to be exercised “at the option of the lender”, when the Term Loan Agreement is properly construed that option is fettered by an obligation to protect the interests of Silo and Mr Mann. That meant the option could not be disregarded so as to allow the lender to sell at an undervalue, especially to himself.
[81] Third, insofar as the loan constitutes a mortgage there is a legal obligation under the Property Law Act to obtain the best price reasonably obtainable.
[82] Fourth, Mr Wilson directing that the receiver refuse to use the Sale and Purchase Agreement created a clog on the equity of redemption. Mr Wilson was not acting in good faith by directing that the receiver not use the Sale and Purchase Agreement, but rather sell to Mr Wilson and his wife for a significantly lesser sum.
[83]Judge Sainsbury observed:35
I have reservations about each of the arguments advanced. However, as mentioned above, it is not the role of the screening process to conduct an imaginary trial or to conduct exhaustive or complicated legal research as to the underlying legal position. My role [is] to determine whether the evidence makes out on a prima facie basis that the elements can be made out.
[84] The applicant says the Judge’s analysis was wrong. It was predicated on the incorrect view that WPA was in possession or control of the Sale and Purchase Agreement, such that Mr Wilson might have been under some associated duty.
[85] Justice Cooke had already held that Mr Wilson had not breached any requirement, by holding that there was no basis to prevent Mr Wilson from enforcing his “legal rights”.36
[86] The District Court Judge did not mention Mr Mann's failed injunction application because it had not been referred to him in any of the documents that Mr Mann had put before the Court.
[87] The applicant says that Mr Wilson was not even under any duty to exercise WPA’s own rights (arising not under the Sale and Purchase Agreement, but under the entirely separate Term Loan Agreement) in any particular way. Specifically, WPA was not required to confer any opportunity for Mr Henderson to procure the Fern Trust to complete the purchase.
[88] The applicant says that the disclosure documents filed in support of the prosecution put this point beyond doubt. The Term Loan Agreement expressly stated that this option was one that was held by the “lender” (WPA, under assignment) “at its option”. As Cooke J concluded, having examined all the affidavit evidence related to the circumstances of the Agreement, WPA had a “legal right” to pursue receivership.
[89] Nor, in the applicant’s submission, can it give rise to a knowing breach, let alone a knowing breach capable of proof beyond reasonable doubt. Whether a greater sum could be obtained elsewhere could not have been known without going to market.
35 Further Direction of Judge N J Sainsbury, 23 May 2022, at [26].
36 Mann v Scutter, above n 7, at [28].
That is what the receiver did. In fact, Mr Mann had given evidence before the High Court that the Property might be worth more than $475,000. Even on the prosecutor’s case theory, predicated upon loss of unrealised gain, had the receiver’s tender process secured $475,000 (or more) for the leasehold estate, there would be no “loss” of any kind.
[90] The applicant also notes that the Sale and Purchase Agreement was legally conditional upon the consent of the lessor Council to the assignment of the leasehold interest, but consent had not been obtained. Mr Wilson says that, without the Council’s consent, the agreement was commercially worthless.
[91] Finally, on this aspect of the claim, the applicant says that the only “requirement” disclosed in the charging document is a “requirement to recover the best price reasonably obtainable” for the leasehold estate. Mr Mann’s full witness statement makes clear that this is a reference to the duties of receivers “to obtain the best price reasonably obtainable ... pursuant to the power of sale”. The applicant says the duties of receivers are not duties of Mr Wilson and, as Cooke J noted, the receiver, Mr Scutter, was an “independent receiver acting as third party” who properly discharged his duties.
Discussion
[92] Analysis of this element of the charge also highlights the confusion as to what comprises the “property” for the purpose of s 220. The property Mr Mann is concerned with is not in reality the Agreement for Sale and Purchase, but rather the obligations arising under the Term Loan Agreement.
[93] The essence of the charge is that WPA/Mr Wilson were “required” to exercise the right under cl 9(1)(l) of the Term Loan Agreement and call on Mr Henderson and Silo to complete the sale. As the prosecutor submitted in the District Court, the words of cl 9(1)(l) – “at the option of the lender” – must be construed as being fettered by an obligation to protect the interests of Silo and Mr Mann.37
37 Further Direction of Judge N J Sainsbury, 23 May 2022, at [23].
[94] In addition, as Mr Allan identifies, the charging documents themselves acknowledge that cl 9(1)(l) gave WPA an option. The summary of facts does not purport to identify any “requirement” either. Rather, it states that despite “being able” to ask Silo to seek recourse under the agreement, “WPA intentionally failed to do so”.38 Mr Mann's formal witness statement repeats that paragraph word for word.
[95] The memorandum of counsel for the prosecutor filed in the District Court submits that the “option” conferred on WPA “can be interpreted as an option not to exercise the sale and purchase agreement if a greater return could be obtained elsewhere”. As Mr Allan says such an option does not give rise to a relevant legal “requirement”.
[96] On the material before the Court the prosecutor cannot make out this element to a prima facie standard.
Intentional dealing in breach of any requirement
[97] As Judge Sainsbury said, s 220 requires both knowledge of a requirement to act in accordance with the requirements of others, and intentional failure to adhere to those requirements of others.39 It is the intentional disregard of known requirements that attracts the sanction of criminal law.
[98] The District Court Judge found that the evidence was such that it was possible to “make out that Mr Wilson was aware of the circumstances”.40 The Judge went on to say that, as Mr Wilson was aware of the Sale and Purchase Agreement and was aware of the offer by Mr Henderson to execute the existing Sale and Purchase Agreement, any decision not to call on him to do so can reasonably be inferred to have been intentional. The question must therefore be whether the “option” to do so was instead a requirement.
[99] Mr Allan says there is no evidence that Mr Wilson “knew” of any requirement to act in accordance with the requirements of anybody else. Counsel says there is no
38 Summary of Facts at [12].
39 Further Direction of Judge N J Sainsbury, 23 May 2022, at [31].
40 At [32]–[33].
reasonable basis upon which such knowledge could be reasonably inferred. Mr Wilson was a director of a company that exercised its contractual rights.
Discussion
[100] As I have already concluded, WPA had the ability to call on the security offered by the Sale and Purchase Agreement. If it had done so, it would then have been in Mr Henderson and Silo’s control whether to proceed. The completion of the Sale and Purchase Agreement was ultimately subject to the consent of the Council as leaseholder.
[101] WPA did not have a contractual obligation to deal with the Sale and Purchase Agreement in a particular way. Ms Markham notes that “deal with” is not restricted to physical handling of the property, but can encompass “any acts that might affect the legal rights or obligations affecting the property or proceeds”. The thrust of the charge is that WPA/Mr Wilson had an equitable obligation to call on that security before taking further steps. It was that obligation that WPA/Mr Wilson must have been aware of for the purpose of s 220.
[102] Mr Allan says that, even if Mr Wilson were fixed with knowledge of some requirement to act in the best interests of Silo (or its personal guarantors) he cannot be shown to have intentionally breached that requirement, or any specific requirement to allow the Fern Trust to purchase the leasehold estate, given that the Fern Trust itself had the opportunity to tender for the leasehold interest on the receivership sale at whatever price it considered appropriate.
[103] I agree that WPA/Mr Wilson must be shown to have had knowledge of the alleged requirement to act in the interests of another. It is not sufficient merely to know of the circumstances. That is the case because, as Mr Allan submits, it is impossible to “intentionally” disregard a requirement that is not known. It is the intentional disregard of a known duty or obligation that transforms what might otherwise be commercial malfeasance into criminal conduct.
[104]As Lang J said in R v Whale:41
A person who is allegedly subject to an obligation of the type that falls within the scope of s 220 should therefore be able to readily recognise the nature and scope of that obligation. This will not present a problem when a person receives property or money subject to an express requirement that he or she is to use or deal with it in a particular way. It becomes a significant issue, however, when the requirement is that the person must act in a prudent and businesslike manner when carrying on the entirety of a company's business.
[105] As discussed above in relation to “knowledge”, the obligation will be clear when there is an express requirement to deal with property in a particular way, but that is not the situation here.
[106] The “requirement” to deal with property in accordance with the requirements of the others hinges on the prosecutor being able to establish either a fiduciary relationship, or that the option of the lender under the Term Loan Agreement was associated with an obligation to protect the interests of others, or a breach of a statutory duty. The Court of Appeal has accepted that the general law may provide “requirements” for the purposes of s 220: Norris v R.42 In this case the summary of facts points to s 19 of the Receiverships Act 1983, s 176 of the Property Law Act 2007 and s 110 of the Personal Property Securities Act 1999.
[107] Justice Cooke’s judgment on the injunction application is relevant.43 While it is correct as Ms Markham submits, that there was not a complete identity of interests between the case considered by Cooke J and the charge in this case, the Judge did have before him the relevant information about the Term Loan Agreement and the Sale and Purchase Agreement. He was aware of the nature of Mr Mann’s grievance against Mr Wilson.44
[108] Justice Cooke accepted that s 25 of the Personal Property Securities Act can be used to challenge the appointment of a receiver. His Honour also accepted that the question whether s 25 requires some active misleading conduct is still undecided, but said “[n]evertheless I do not think there is an arguable case for the application of s 25
41 R v Whale [2013] NZHC 731 at [489].
42 Norris v R [2013] NZCA 526, [2014] 2 NZLR 391.
43 Mann v Scutter, above n 7.
44 See [38] above.
here.”45 The Court cited Fatupaito v Harris where the Court of Appeal reviewed the authorities in relation to the application of s 25 to enforcement action by a secured creditor. The Court of Appeal in that case held:46
[53] A mortgagee therefore need not have purity of purpose. But it does act in bad faith if, judged objectively, it acts for a predominant purpose which is collateral to, or to use the language of this Court in Coltart v Lepionka and Co Investments Ltd, exogeneous to, its interests as mortgagee in preserving its security and obtaining repayment of a secured debt. However a mortgagee does not act in bad faith if the effect of the exercise of its power undertaken for the predominant purpose of securing repayment is that it secures to itself some collateral advantage.
[109] The High Court discussed possible criticisms of Mr Wilson’s actions but went on to say:47
[25] But, in any event, Mr Wilson’s business strategy has been implemented through the technique of appointing a receiver, and the receiver has gone about his tasks in accordance with the receiver’s normal functions and duties. He has advised the property for sale on the open market by a tender process. Seven tenders were received. It would appear that the highest tenderer was Mr Wilson. This may mean that Mr Wilson has proceeded in a manner that has meant that he has secured a collateral advantage — he has obtained ownership of the next door property that he wished to own. But this has been also done in a way that apparently preserves a sale at market value through the use of an independent third party acting as receiver.
[110] And the Court affirmed Mr Wilson’s right, through the receiver, to exercise the power of sale of the Property:48
[28] But Mr Wilson did not cause the collapse, and he has taken on his own business risks in the steps that he has taken. There is no basis to prevent him from enforcing the legal rights that he has paid to acquire. Such rights could equally have been exercised by Isso itself had it wished to take enforcement action.
[111] I conclude that there is insufficient evidence for the prosecutor to establish on a prima facie basis that WPA/Mr Wilson were aware of a specific obligation to act in accordance with the interests of Mr Mann and Silo.
45 At [24].
46 Fatupaito v Harris [2018] NZCA 497, [2019] NZAR 192 at [53].
47 Mann v Scutter, above n 7, at [25].
48 At [28].
[112] Further, whether WPA/Mr Wilson could be shown to have intentionally breached a requirement to act in Silo and Mr Mann’s best interests, including by allowing the Fern Trust, through Mr Henderson, to purchase the Property, is far from clear. As Mr Allan submits, they cannot have known (1) the price that the Property might fetch on any tender by the receiver, or (2) whether Silo would be able to enforce a sale at $475,000 under the Sale and Purchase Agreement, given that contract was contingent upon lessor consent.
Conclusion in relation to evidential sufficiency
[113] As counsel assisting acknowledges, the prosecutor’s reliance on s 220 in the circumstances of the present case appears novel. Ms Markham points to available inferences from the prosecution evidence, taken at its highest, which would show that Mr Wilson’s alleged conduct was, in a lay sense, dishonest. Mr Wilson wanted the Property for himself and used information confided in him by Mr Mann in order to achieve this, while misrepresenting to Mr Mann the true position. It was in Mr Wilson's interests to acquire the Property for the lowest price he could achieve, while still being able to satisfy the debt owing to WPA. Silo and the other creditors and guarantors plainly did not share this interest.
[114] Ms Markham notes also that, although the sale was actioned by Mr Scutter as receiver, Mr Wilson in effect instructed him to sell via tender, and that the clause 9.1(l) option would not be exercised.
[115] Further, Mr Wilson did not provide Mr Scutter with a copy of the Agreement for Sale and Purchase. Mr Scutter received a copy only on 9 June 2020, after being alerted to it by Mr Henderson in his letter of 29 May 2020. This was essentially too late: Mr Scutter had either already accepted (or accepted the same day) Mr Wilson’s unconditional offer.
[116] However, even taking the prosecutor’s case at its highest and accepting that Mr Wilson engaged in sharp practice, or was dishonest in a lay sense, that is not in itself sufficient to meet the requirements of s 220. As Judge Sainsbury said, “it may
be that [Mr Wilson's conduct] is morally repugnant, rapacious and unethical but it might not be criminal.”49
[117]The District Court Judge observed:50
The gatekeeping process I am going through does not get me to the position of being able to give a definitive answer on the legal issues raised under this element of the charge. But, nor are the issues raised clearly wrong or able to be disregarded as unmeritorious. The evidence may not establish that Mr Wilson was required to deal with the property in accordance with the requirements of Mr Mann, but what it does establish is that he may have been required to do so. I conclude that under the s 26 procedure, and in the context of this particular offence, that this is sufficient to make out the ground to the required standard.
[118] In conclusion, I agree with Judge Sainsbury that the process of analysis of each element of the s 220 offence does not enable a definitive answer on the legal issues raised. However, unlike Judge Sainsbury, I conclude that the difficulties inherent in all elements of the offence mean that, having regard to the cumulative effect, it is simply not possible for Mr Wilson, or this Court, to be able to “readily recognise the nature and scope” of the obligation.
[119] I acknowledge that Mr Mann has reason to feel aggrieved at Mr Wilson’s conduct. It seems to me that his strongest argument is that the particular context of his relationship, where it is said Mr Wilson earlier promised to assist him out of his financial difficulties, may have created some kind of obligation, akin to a fiduciary obligation. It may be that Mr Mann could found a civil claim against Mr Wilson and/or WPA (although I reach no conclusion on that). However, the possibility of being able to establish that such a relationship did exist is not in itself sufficient basis for a criminal prosecution under s 220.
[120] I conclude that, on a prima facie basis, the evidence advanced is not sufficient to prove the elements of the s 220 charge to the required standard.
49 Further Direction of Judge N J Sainsbury, 23 May 2022, at [28].
50 At [29] (emphasis original).
Abuse of process
[121] Although it is not strictly necessary to do so, given my finding in relation to evidential sufficiency, I also consider the ground that the charging document was an abuse of process under s 26(3)(b) of the CPA and should not have been accepted for filing under s 26 for that further reason. There is a degree of overlap between the two grounds.
[122] The Judge took the view that there was nothing in the circumstances before him that marked the proposed prosecution as an abuse of process.51
[123] Mr Allan for the applicant says that the prosecutor knew that the High Court had already determined that the issue of whether WPA was entitled to appoint a receiver did not qualify as a serious question to be tried in the sense of being neither frivolous nor vexatious.52 The basis of the High Court’s decision was the conclusion that WPA was acting entirely in accordance with its “legal rights”.
[124] The meaning of “abuse of process” arises most commonly under rule 15.1 of the High Court Rules 2016. The ground of abuse of process was explained in Air National Corporate Ltd v Aiveo Holdings Ltd:53
The ground of abuse of process is said to extend beyond the other grounds set out in r 15.1(1) to catch all other instances of misuse of the court’s process, including where a proceeding has been brought with an improper motive or to seek a collateral advantage beyond that legitimately gained from a Court proceeding.
[125] In the Air National case, Associate Judge Abbott summarised the principles to be applied in ascertaining whether a proceeding has been pursued for “improper” motive or purpose:54
(a)The improper purpose need not be the sole purpose, as long as it is the predominant purpose.
(b)…
51 At [34].
52 Mann v Scutter above n 7, at [12] and [26].
53 Air National Corporate Ltd v Aiveo Holdings Ltd [2012] NZHC 602 at [30] (footnotes omitted).
54 At [32] (footnotes omitted).
(c)The onus is on the party alleging abuse of process to show that the proceeding was brought for an improper purpose. It is “a heavy onus” and one to be exercised only in exceptional circumstances…
(d)It is unnecessary to prove commission of an improper act to justify exercise of the power to stay; however, except in the clearest of cases, it will be necessary to point to some separate manifestation of the defendant's intent in the form of an overt act such as a demand which identifies the true collateral purpose.
[126] In Daemar v Soper the Court of Appeal said that the exercise of judicial discretion to issue a summons requires the Judge or Registrar to consider, among other things, whether the allegation is vexatious.55 Mr Allan says that the question of whether an allegation is “vexatious” should inform the Court's assessment of what constitutes an “abuse of process” under s 26, as the purpose in each case is to determine whether it is in the interests of justice to allow a private prosecution to proceed.
[127] Counsel’s submission is that a private prosecution will constitute an abuse of process under s 26 if (inter alia) it has been brought with an improper motive (as demonstrated through an independently manifested collateral purpose) or is vexatious in the sense of seeking to substantially replicate previously rejected argument. That is the nub of the argument here. In presenting the charging document for filing and then filing evidence in support of it, the prosecutor knew that Cooke J had already determined that the issue of whether WPA was entitled to appoint a receiver did not qualify as a serious question to be tried in the sense of being neither frivolous or vexatious.
[128] The applicant says that Mr Mann seeks to substantially replicate that failed argument even though it is plain that Mr Wilson cannot be both free to exercise “legal rights” yet constrained from so doing by a “requirement” to act in accordance with directions from others.
[129] Neither of the formal witness statements mentions the fact of Mr Mann's injunction application, its outcome or the reasons for that outcome.
55 Daemar v Soper [1981] 1 NZLR 66 (CA) at 69, quoting R v West London Justices, ex parte Klahn
[1979] 2 All ER 221.
[130] In seeking “restitution” of an alleged prospective loss of $105,000 Mr Mann seeks to collaterally challenge the High Court's finding that the sale price achieved by the receiver was achieved “in a way that apparently preserves a sale at market value through the use of an independent receiver acting as third party”.
[131] The applicant says that Mr Mann's inference that the receiver failed to meet his normal statutory duties, constitutes a further collateral challenge to this Court's finding that the receiver “has gone about his tasks in accordance with the receiver's normal functions and duties”.
[132] The applicant points to Mr Mann's affidavit in support of his application for an interim injunction where he said: “I am concerned that title will pass and the property will be lost. At that point, I do not believe that damages would be an adequate remedy. But I also want to pursue the possibility of seeking damages against Mr Wilson and his company for the underhand way in which they have manoeuvred to purchase the property...”.
[133] Mr Mann has not brought a civil claim for damages against Mr Wilson. Mr Allan says doubtless for the reasons given by Cooke J – that is, that WPA was lawfully exercising its contractual rights.
[134] The applicant says that this prosecution amounts to an attempt by Mr Mann to navigate that impediment by effectively seeking damages through a criminal reparation order. The prosecution has been brought in lieu of any viable civil claim for damages. This completely ignores the requirement at criminal law for breach of some “requirement” arising at civil law, which requirement does not exist.
[135] The applicant also says that the attempt to bring a private prosecution in these circumstances is motivated by personal animus on Mr Mann's part. That is demonstrated by Mr Mann's decision to prosecute only Mr Wilson, and not WPA, even though the contractual rights in issue were held and exercised by WPA and Mr Wilson's alleged liability arises only by virtue of his directorship of WPA.
[136] The applicant relies on Vector, where Glazebrook J said that the two issues of evidential insufficiency and abuse of process may in some cases be related.56 Mr. Allan says this is a clear example of that interrelationship: the prosecutor's decision to bring a charge premised on intentional breach of some “requirement”, whilst knowing that this Court had rejected that premise – and his subsequent failure to identify that to the District Court, despite the District Court expressly seeking further information directed at the point – could hardly be considered accidental.
[137] Ms Markham says that the Judge’s conclusion as to abuse of process was plainly open to him, if not inevitable. As she indicates, the named prosecutor is not Mr Mann but New Zealand Commercial Law Corp Ltd, and Mr Hayes’ involvement as counsel would have provided the Court with some reassurance of bona fides.
[138] Counsel assisting notes that this ground of review is based on material that was not before Judge Sainsbury. Counsel opposes the admission of the new material in this Court, at a very late stage. In Ms Markham’s submission this reinforces that judicial review is not the appropriate forum.
[139] As to the applicant's reliance on Cooke J’s decision, Ms Markham points to section 50(1) of the Evidence Act 2002 which provides:
Evidence of a judgment or a finding of fact in a civil proceeding is not admissible in a criminal proceeding or another civil proceeding to prove the existence of a fact that was in issue in the proceedings in which the judgment was given.
[140] Counsel also notes the particular issues raised by the proposed prosecution (e.g the alleged obligation to obtain best price/invoke the option under clause 9.1 (l)) were not in issue before Cooke J. The criminal law, in any event, does not recognise issue estoppel.57
Discussion
[141] In his direction of 13 December 2021 Judge Sainsbury highlighted that he had concerns about the evidential sufficiency of the material filed by the prosecutor up to
56 S (SC 58/2019) v Vector Ltd, above n 21, at [99].
57 R v Cossey [1991] 1 NZLR 566 at 568.
that point. The Judge noted “one specific concern is that I do not see how the claimed special relationship under s 176 of the Property Law Act 2007 can have arisen, when the sale was exercised not by the mortgagee, but by the receiver. Therefore, the duty to obtain a reasonable price would have, in my preliminary assessment, arisen under s 19 of the Receiverships Act 1993 and be binding not on the proposed defendant, but the receiver himself.”
[142] Following that direction the prosecutor filed statements dated 14 October 2021 from both Mr Mann and Mr Henderson. Counsel for the proposed prosecutor also filed submissions on 14 October 2021. None of those documents referred to Cooke J’s judgment of 17 April 2020 on Mr Mann’s application for an interim injunction to prevent the receiver proceeding with the sale of the Property.
[143] In those circumstances there was no reason for the Judge to believe that the proposed prosecution was an abuse of process.
[144] However, the injunction judgment was plainly relevant – particularly in light of the reservation that Judge Sainsbury had expressed and his request for further evidence and the almost complete overlap in the substance of the two cases. At their core, both concern Mr Mann’s allegation that Mr Wilson had taken unfair advantage of him and Silo. The judgment would no doubt have informed Judge Sainsbury’s ultimate s 26 decision.
[145] Further, the prosecution does, at least in part, attempt to replicate the argument that was heard before Cooke J.
[146] While in usual circumstances it would be inappropriate on an application for judicial review to consider evidence that was not before the decision-maker,58 this was information existing at the time the District Court Judge sought further information pursuant to s 26, it was highly relevant information and there can be no other conclusion than that it was deliberately withheld from the Judge. In those circumstances, I conclude it is relevant to consider Cooke J’s judgment.
58 See Graham Taylor Judicial Review: A New Zealand Perspective (4th ed, LexisNexis, Wellington, 2018) at 475–476.
[147] For those reasons, I conclude that proceeding with the prosecution, in the absence of advice to Judge Sainsbury about the fact and result of the interim injunction application, was an abuse of process.
Result
[148]Mr Wilson’s application is granted. I direct that:
(a)the District Court’s decision to accept the charge for filing is set aside.
(b)The Registrar of the District Court is not to accept the charging document for filing.
Costs
[149] Counsel are to file any submissions as to costs within 10 working days of this judgment and I will determine costs on the papers.
Gwyn J
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