Hitchinson v R Ca

• Jurisdiction: New Zealand
• Judge: Winkelmann J
• Judgment Date: 20 August 2010
• Neutral Citation: [2010] NZCA 388
• Docket Number: CA749/2009
• Court: Court of Appeal
• Date: 20 August 2010

BETWEEN

Peter Justin Hitchinson

Appellant

and

The Queen

Respondent

[2010] NZCA 388

Court:

Chambers, Winkelmann and Venning JJ

CA749/2009

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against conviction for theft by a person in a special relationship under s220 Crimes Act 1961 — appellant was an investment manager and was convicted of misappropriating client funds — whether emails admitted as evidence were previous consistent statements and should have been excluded under s35 Evidence Act 2006 — whether the District Court erred in directing the jury that the appellant could not rely on a written acknowledgment of his use of the investment funds as ratification.

Counsel:

P J Davey for Appellant

M A Woolford for Respondent

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Winkelmann J)

1 The appellant, Mr Hitchinson, was found guilty by a jury of six counts of theft by a person in a special relationship, an offence pursuant to s 220 of the Crimes Act 1961. He was sentenced by Judge Joyce QC on 6 November 2009 to three years, four months imprisonment. Mr Hitchinson appeals against his conviction on counts 6 and 7 of the indictment which charged:

6 ….. Peter Justin Hitchinson, between 8 September and 13 November 2006 or thereabouts, at Whangarei or elsewhere in New Zealand, having control over property, namely US$195,448.69, on terms and in circumstances that he knew required him to deal with that property in accordance with the requirements of another person, namely Donald Currie, intentionally dealt with the property otherwise than in accordance with those requirements and thereby committed theft.

7 ….. Peter Justin Hitchinson, between 17 October and 23 November 2006 or thereabouts, at Whangarei or elsewhere in New Zealand, having control over property, namely US$65,000, on terms and in circumstances that he knew required him to deal with that property in accordance with the requirements of another person, namely Barry Reiher, intentionally dealt with the property otherwise than in accordance with those requirements and thereby committed theft.

2 In respect of count 6, the grounds of appeal are that:

• (a) the Judge erred in allowing two emails to be admitted as evidence which were, on Mr Hitchinson's case, evidence of previous consistent statements by Mr Currie and therefore inadmissible by reason of the prohibition contained in s 35 of the Evidence Act 2006 (the Act) against the admission of previous statements of a witness consistent with the witness's evidence, and

• (b) the Judge was wrong to direct the jury that Mr Hitchinson could not rely on a subsequent written acknowledgment by Mr Currie of Mr Hitchinson's use of the funds as a ratification of that use and hence as a defence to the charge.

3 In relation to count 7, the appellant argues that the Judge erred in admitting evidence of an email from the complainant which the appellant says was inadmissible, again by reason of the s 35 prohibition.

4 A fourth ground of appeal contained in the notice of appeal, concerning the Judge's failure to discharge the jury, was abandoned at the hearing.

Appeal in relation to count 6

Factual background

5 Mr Hitchinson, through his company, FHXT Fund Managers Ltd (FHXT FM), offered to invest funds for clients in online foreign currency trading. Investors' funds were deposited with a foreign exchange trading platform. Each investor was allocated a client account showing their funds. FXHT FM took commission from the trading and any profit in excess of an agreed amount, with all other profits accruing to the client's account.

6 From June 2005 to September 2006, the online foreign currency trading platform used by FXHT FM was Foreign Exchange Clearing House Ltd, also known as “Forex Swiss”. Client funds were traded online through the Forex Swiss platform by Mr Hitchinson and an associate of his. Clients who invested with FXHT FM entered into a written client agreement which provided:

2.3 The client hereby mandates FXHT Fund Managers Ltd to operate a managed account on behalf of the client.

2.4 FXHT Fund Managers Ltd will not handle or transfer funds or financial instruments on behalf of the client.

2.5 All monies received (including profits) will accrue to the account of the client and will be held by Forex Swiss [or FX Active] in the Client's own trading account.

7 In early 2006 Mr Currie invested three sums, NZ$30,000, NZ$680,000 and again NZ$30,000 with FXHT FM, although subsequently withdrawing US$154,000 in May 2006.

8 In late August and September 2006 the Curries were travelling in Australia. There was a chain of emails around this time in which the Curries sought clarification from Mr Hitchinson as to the state of their investment and requested a simplified statement to assist them in understanding it. In his deposition statement and at trial Mr Currie said that in September 2006 Mr Hitchinson phoned him and told him that FXHT FM was changing trading platforms as Mr Hitchinson was not happy with the current platform's performance. Mr Hitchinson said that he thought that the current platform was making mistakes so they were opening another platform which would give the Curries a better return. He told the Curries that their funds would be transferred to their bank account and that they would then have to put them into another account for investment through the new platform.

9 Subsequently, on the evening of 7 September 2006, the Curries received a phone call from Westpac Bank, Sydney telling them that US$195,448.69 had been deposited into their account. They went to the bank first thing the following morning and transferred the money as they had been instructed by Mr Hitchinson.

The Curries' email

10 On 11 September 2006 Mr and Mrs Currie sent Mr Hitchinson an email. Evidence produced at trial established that the email had been received on Mr Hitchinson's computer. The subject line of the email is ‘Transfer Done’, and the text of the email reads as follows:

Hello Justin,

We had a foreign woman ring us from Sydney Westpac Bank about 6.30 Thursday evening to let us know about the large sum of U.S. dollars (195,448.69) that was deposited into our account and wanted our signatures and verification of our identities and what we were going to do with the money. We told her it was our investment and our fund manager was changing the investment platform. In order to get the signatures a.s.a.p. we went to Cairns Bank first thing Friday morning. They faxed through all our relevant details and we asked them to confirm the transaction by ringing us. They did this within the hour but did not deduct the $50 nor the $1000 which we requested and in order to change things at that stage it would delay things until Monday so we said to let it go through as is. This means we are still short and would like an extra $2,500 transferred into our account this week. This should make it worthwhile doing the transaction, and help us with our touring.

The letter for Centre Link you can forget about, but we would still appreciate having a summary of the financial accounts of how we stand and how we can check on this from now on. (What is it in NZ dollars, U.S. dollars and Aussie dollars?) round figures. We understood from our conversation over the phone that there were two sums of money, one $195000 and an amount of $86000, should this make a total of $281000 @ 2.25%? If this is so how have you divided this up for our monthly income etc. Please confirm.

How did you enjoy Fiji?

Cherrio for now,

Don and Rose.

11 The funds were not invested in foreign exchange trading by Mr Hitchinson. Over the three weeks following the fund transfer, he used the Curries' capital to pay his personal and company expenses, to top up other investor's accounts and to pay a small amount to the Curries. The latter payment was purportedly a payment of interest, but was in reality a return of a portion of their own capital. Mr Hitchinson's defence to the charge of theft was that in a telephone conversation in early September, Mr Currie agreed that Mr Hitchinson could treat the balance of the funds invested as a loan to FXHT FM. The background to this agreement was that he had told Mr Currie that the company needed this money to avoid liquidation because of heavy losses incurred in trading clients' funds. The reliability and credibility of Mr Currie's account that he had invested the money with Mr Hitchinson for foreign exchange trading was therefore critical to the Crown's proof of count 6.

12 Prior to the hearing of the charges against Mr Hitchinson, his counsel objected to the admissibility of the September email on the basis that it was a previous consistent statement. That issue was dealt with by Judge Joyce in a pre- trial ruling.

13 He also dealt with one Mr Reiher's email that is relevant to count 7 which we address later.

14 The Judge said of both emails:

[25] The two emails do not, on their own, have the capacity to prove the truth of matters of asserted fact to which they allude but they are, naturally and logically, part and parcel of the tales respectively told by Reiher and Currie.

[26] Save for the fact of their being on record (because of the method of communication used) they are in no different category from communications to like effect made over the telephone or conveyed face to face, a recounting of which would be an ordinary and natural part of the course of evidence.

[27] Moreover, they are communications to which the accused had every apparent chance to respond at the time. They are not things written or communicated behind, as it were, his back or otherwise without his knowledge.

[28] In my view s 35 has got nothing directly relevant to do with either of these two emails.

[29] But they are patently relevant in terms of s 7 of the Evidence Act and there is no basis for arguing an unfairly prejudicial effect in terms of s 8(2).

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