Ede v R

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeChambers,,Winkelmann,Fogarty JJ
Judgment Date06 Aug 2010
Neutral Citation[2010] NZCA 358
Docket NumberCA694/2008

[2010] NZCA 358

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Chambers, Winkelmann and Fogarty JJ

CA694/2008

BETWEEN
Bryce Graeme EDE
Appellant
and
The Queen
Respondent
Counsel:

S J Bonnar for Appellant

M F Laracy for Respondent

ORDER PROHIBITING PUBLICATION OF THE REASONS FOR JUDGMENT IN NEWS MEDIA OR ON THE INTERNET OR ANY OTHER PUBLICLY AVAILABLE DATABASE UNTIL FINAL DISPOSITION OF THE NEW TRIAL. PUBLICATION IN LAW REPORT OR LAW DIGEST IS, HOWEVER, PERMITTED.

JUDGMENT OF THE COURT
  • A The appeal is allowed.

  • B The conviction is quashed.

  • C A new trial is ordered.

  • D An order is made prohibiting publication of the reasons for judgment in the news media or on the internet or in any other publicly available database until final disposition of the new trial. Publication in a law report or law digest is, however, permitted.

REASONS OF THE COURT

(Given by Chambers J)

Farm sale at an undervalue
1

Arnold and Mervyn Heta, who are brothers, owned a farm at Tauwhare. Through the fraud of others not parties to this appeal, the Hetas became subject to two oppressive loans, which were secured against their previously unencumbered property. The Hetas got behind in their payments on both loans. The prospect of a mortgagee sale loomed large.

2

Malcolm McKelvey, a fraudster who had been instrumental in arranging the loans for the Hetas and then fraudulently siphoning their funds, contacted Bryce Ede, the appellant, who was a mortgage broker and director of a number of finance companies. Mr McKelvey asked Mr Ede if he could arrange refinancing of the Hetas' loans. Mr Ede put together some proposals, but the Hetas did not accept his refinancing offers. Mr Ede said this work was worth $12,000 in fees to him. Despite the fact that the Hetas had never commissioned his services and did not take up the offers, Mr Ede decided the Hetas owed him $12,000 and he embarked on a process of what he called “debt recovery”.

3

Mr Ede approached Basecorp Finance Ltd, the second mortgagee, and told them that Mr McKelvey was looking to buy the first mortgage held by Provincial Finance Ltd. This concerned Basecorp, who believed that Mr McKelvey, if he acquired the Provincial mortgage, was likely to sell the farm for little more than what was owing on that mortgage, with the result that subsequent chargeholders, including itself, would lose out. Basecorp thus decided to acquire the Provincial mortgage first. On 9 May 2002, it signed an agreement with Provincial to purchase its mortgage for $142,000.

4

Mr Ede then offered to buy both securities from Basecorp. An agreement to that effect was reached on 18 May. The purchaser was Statesman Holdings Ltd, one of Mr Ede's companies. The purchase price was the value of the securities, $208,000.

5

Prior to signing the Basecorp deal, Mr Ede had already had discussions with Bill Sterling, the director of Aroha Fisheries Ltd, to privately sell the land to Aroha as soon as the mortgages were acquired. The sale would be pursuant to the mortgagees' power of sale. The sale price would be $220,000. Mr Sterling sent Mr Ede a signed offer in that sum on 9 May. According to Mr Ede, he faxed a copy of the offer to his normal solicitor, Don Howden, seeking advice. He then decided to seek advice from Bob Warburton, an Auckland lawyer recommended by Mr Sterling. According to Mr Ede, Mr Warburton thought the proposed sale price was reasonable. On 14 May, Mr Ede signed the offer and an agreement was thereupon entered into. (We shall call that agreement “the Aroha agreement”.)

6

The Crown case was that Mr Ede knew, when he signed the Aroha agreement, that he was selling the farm at a gross undervalue. A real estate agent had recently told him that the Hetas' property had a market value of $350,000, and possibly even up to $400,000 if properly marketed. He also knew that a neighbour, the Moses family, who for two generations had leased most of the Heta land, had offered to pay $340,000 for it.

7

At the same time Mr Ede was agreeing to sell the land for $220,000, Aroha entered into an agreement with the Moses family to sell the land for $340,000. That agreement, at the Moses' solicitor's request, was made subject to a condition that Aroha should satisfy the purchasers by 22 May that it did in fact have clear title to sell. When Aroha was unable to satisfy the Moses family on that, they cancelled the agreement.

8

On 6 June, the Hetas, accompanied by Mr Sterling, went to see a Tauranga solicitor, Areta Gray. Mr Sterling told Ms Gray the Hetas' property was in danger of being sold and explained that Statesman, who he said had bought the mortgages, was looking at selling the property to Aroha. Ms Gray agreed to act for the Hetas. She decided the best course of action was for them to try to redeem the mortgages. To do that the land would have to be sold. She contacted the Moses to negotiate a price for the Hetas' land and Statesman to advise that the Hetas wished to redeem.

9

Mr Warburton, on behalf of Statesman, responded that the redemption figure would be $265,000, which included “consideration” for Aroha agreeing to cancel the Aroha agreement, with additional interest accruing daily. The Hetas agreed to pay this. They subsequently agreed to sell most of their land to the Moses for $270,000. (Still later they sold the rest for $80,000, salvaging something from the mess.)

10

On 4 July, settlement took place. The Moses paid $270,000 to the Hetas in exchange for the land. The Hetas paid Statesman $267,000 in exchange for the discharge of the mortgages. Statesman paid Basecorp $214,000 for the assignment of the securities. Statesman's profit of about $50,000 was then split 50/50 between Aroha and Senator Holdings Ltd, another of Mr Ede's companies. The Aroha agreement was discharged by agreement.

11

The Crown case was that in early May 2002 Messrs Ede and Sterling concocted a plan whereby they would deliberately eliminate the equity of the Hetas with a view to sharing that equity between them. Mr Ede knew that, by so doing, he was breaching the obligation he owed to the Hetas under s 103A of the Property Law Act 1952, namely “a duty to take reasonable care to obtain the best price reasonably obtainable as at the time of sale”.

12

Mr Ede faced two charges. The first was that he, with intent to defraud, obtained a document capable of being used to obtain a benefit, namely the agreement for sale and purchase between Statesman and Aroha, contrary to s 229A(a) of the Crimes Act 1961. The second charge was that Mr Ede, with intent to defraud, used a document capable of being used to obtain a benefit, namely a letter recording the redemption price for the mortgage in respect of the farm for the purpose of obtaining for himself or another pecuniary advantage, contrary to s 229A(b). A jury found Mr Ede guilty on the first charge and not guilty on the second.

13

Mr Ede now appeals against his conviction.

Issues on the appeal
14

Mr Bonnar, for Mr Ede, raised three principal grounds of appeal.

15

The first complaint concerned the conduct of Mr Ede's trial counsel, Mr Comeskey, both prior to trial and at trial. Mr Bonnar submitted Mr Comeskey's performance was so abysmal that a miscarriage of justice had arisen.

16

The second complaint concerned the prosecutor's conduct at trial. This related to the Crown's use of certain documents which allegedly had not been disclosed to the defence.

17

The third ground of appeal related to alleged misdirections by the trial judge, Judge Field. We are satisfied Mr Ede must succeed on this ground of appeal. In those circumstances, we find it unnecessary to deal with the first two complaints, although we shall refer in passing to Mr Comeskey's lamentable closing address.

Did the Judge misdirect the jury on the first count?
Obtaining a document
18

As we have said, Mr Ede was charged under s 229A(a). Because that section is no longer in force, we set it out:

Taking or dealing with certain documents with intent to defraud

Everyone is liable to imprisonment for a term not exceeding 7 years who, with intent to defraud, –

  • (a) Takes or obtains any document that is capable of being used to obtain any privilege, benefit, pecuniary advantage, or valuable consideration; or

  • (b) Uses or attempts to use any such document for the purpose of obtaining, for himself or for any other person, any privilege, benefit, pecuniary advantage, or valuable consideration.

19

The first count was framed in terms of Mr Ede having obtained a document with intent to defraud. The document relied on was the Aroha agreement. Mr Bonnar took the point, however, that the Aroha agreement was the same document as the Aroha offer; all that had happened to it was that Mr Ede subsequently signed it as vendor. His act of signing, however, was not an act of “obtaining”. He obtained the document on 9 May when Mr Sterling gave it to him.

20

The effect of Mr Bonnar's argument was this. If the only document “obtained” was the Aroha offer, then the trial on this charge went awry.

21

First, Mr Ede obtained that document on 9 May. The section requires the “intent to defraud” to be present at the time of the obtaining. That would have required an investigation of Mr Ede's state of mind prior to and at the time of receiving Aroha's offer. The Judge never asked the jury to focus on that. At trial, the focus was exclusively on 14 May. On the evidence, there was potentially a significant difference between Mr Ede's knowledge of his obligations on 9 May compared with 14 May. By the latter date, he had received advice from two solicitors about his obligations under s 103A of the Property Law Act. Ms Laracy, for the Crown, accepted that, if the document were “obtained” on 9 May, then the trial had gone awry. She accepted the entire focus had been on Mr Ede's knowledge and intent at the time he signed the agreement on 14 May.

22

Secondly, Mr Bonnar submitted that,...

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