Nisbet v R Coa

• Jurisdiction: New Zealand
• Judge: Lang J
• Judgment Date: 21 June 2011
• Neutral Citation: [2011] NZCA 285
• Docket Number: CA96/2011
• Court: Court of Appeal
• Date: 21 June 2011

BETWEEN

Craig Grant Scott Nisbet

Appellant

and

The Queen

Respondent

[2011] NZCA 285

Court:

Glazebrook, Chambers and Lang JJ

CA96/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against conviction and sentence — appellant convicted under s220(1)(b) Crimes Act 1961 (theft by person in special relationship — required to deal with property in accordance with requirements of other person) and sentenced to three and a half years' imprisonment — appellant failed to use GST refund as required — meaning of “requirement”.

Counsel:

J C Gwilliam and S J Irons for Appellant

A Markham for Respondent

• A The appeal against conviction is dismissed.

• B The appeal against sentence is allowed and the sentence of three years six months' imprisonment is quashed. A sentence of three years' imprisonment is imposed in its place

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Lang J)

Table of Contents

	Para No
Introduction	[1]
The Crown case	[2]
The charge	[7]
The appeal against conviction	[11]
Did the Judge err in the manner in which he discharged his obligation under s 220(4)?	[12]
How did the circumstances give rise to a requirement obliging Mr Nisbet to deal with the GST refund in accordance with Mr Walbran's requirements?	[27]
This case	[34]
Our assessment	[38]
Did the Judge misdirect the jury in relation to the meaning of “requirement” for the purposes of s 220(1)(b)?	[54]
Was the jury's conclusion that Mr Nisbet had control of Whariki's GST refund unreasonable having regard to the evidence?	[62]
The appeal against sentence	[68]
Result	[81]

Introduction

1 Mr Nisbet was found guilty by a jury in the District Court at Wellington on a charge of theft by a person in a special relationship. On 17 February 2011 Judge Harrop sentenced him to three and a half years' imprisonment. 1 He now appeals against both conviction and sentence.

The Crown case

2 The charge against Mr Nisbet arose after he entered into a business relationship with Mr Warwick Walbran. The two men formed a company called Whariki Ltd (Whariki) to develop a substantial area of land at Sponge Bay, near Gisborne. They intended to convert the land into residential lots.

3 The land at Sponge Bay was owned by a company called Tuamotu Ltd (Tuamotu). Tuamotu had earlier agreed to sell the land to Falmouth Properties Ltd (Falmouth), a company wholly owned by Mr Nisbet. Falmouth agreed to on-sell the land to Whariki immediately after acquiring it from Tuamotu.

4 Mr Walbran invested approximately $560,000 in the venture. In order to formalise their business relationship, Mr Walbran and Mr Nisbet entered into a written shareholders agreement governing the manner in which Whariki was to operate. Mr Walbran did not, however, play any part in the day to day management of Whariki's affairs. He left that entirely to Mr Nisbet.

5 In addition to the capital that Mr Walbran provided, Whariki required significant external funding in order to be able to complete the purchase of the land. It obtained that funding from two financiers, one of whom was Blackbird Finance Ltd (Blackbird). Blackbird agreed to advance funds to Whariki on the basis that Whariki would repay the sum of $225,000 within 90 days of the date of the advance. It was common ground at the trial that both Mr Nisbet and Mr Walbran anticipated that Whariki would comply with this requirement by using the GST refund to which it would be entitled after purchasing the land from Falmouth.

6 Falmouth had received the GST refund to which it became entitled when it acquired the land from Tuamotu. It then incurred a significant GST liability when it on-sold the land to Whariki. In order to meet this liability, Mr Nisbet told the accountants who acted for both Falmouth and Whariki to authorise the Inland Revenue Department to apply Whariki's GST refund to offset Falmouth's GST liability. This led to Mr Nisbet being charged with theft under s 220(1)(b) of the Crimes Act 1961.

The charge

7 Section 220(1)(b) relevantly 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—

• …

• (b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

• (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.

• ….

• (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.

8 Section 220, which was enacted by the Crimes Amendment Act 2003, replaced the original s 222 of the Crimes Act 1961, which had created the offence of theft by failing to account. Section 220 also replaced the old s 223 (theft by a person holding a power of attorney) and the old s 224 (theft by misappropriating proceeds held under directions).

9 The Crown alleged that Mr Nisbet assumed control over the GST refund in circumstances where he knew that it was subject to a requirement imposed by Mr Walbran. The requirement was to use the GST refund to partly repay the debt owing to Blackbird. The Crown contended that, in authorising the Inland Revenue Department to offset Whariki's GST refund against Falmouth's GST liability, Mr Nisbet intentionally dealt with the refund otherwise than in accordance with that requirement.

10 Mr Nisbet acknowledged that both he and Mr Walbran anticipated that the GST refund would be used to reduce the Blackbird loan. His counsel accepted that failure to use the loan for that purpose might expose Mr Nisbet to civil liability to Mr Walbran for any losses that Mr Walbran suffered as a result of Mr Nisbet's actions. He contended, however, that it did not amount to the breach of a requirement of the type necessary to produce criminal liability under s 220(1)(b).

The appeal against conviction

11 Counsel for Mr Nisbet advanced the appeal against conviction on the following grounds:

• (a) the Judge erred in the manner in which he discharged his obligation under s 220(4) to determine whether the circumstances obliged Mr Nisbet to act in accordance with a requirement by Mr Walbran that the GST refund was to be applied in reduction of the Blackbird loan;

• (b) the Judge misdirected the jury in relation to the meaning of “requirement” in s 220(1)(b); and

• (c) the jury's conclusion that Mr Nisbet had control of the GST refund was unreasonable having regard to the evidence.

12 During the hearing, counsel for Mr Nisbet abandoned a submission that, in order to prove the charge, the Crown needed to establish that Mr Nisbet had acted dishonestly and without claim of right. He made that concession in the light of comments made in R v Sizemore, where this Court said that dishonesty and an absence of claim of right were not elements of a charge laid under s 220. 2

Did the Judge err in the manner in which he discharged his obligation under s 220(4)?

13 Liability cannot arise under s 220 unless the circumstances required the accused to deal with property in accordance with the requirements of another person. Section 220(4) provides that it is a question of law whether the circumstances give rise to that obligation on the part of the accused. Questions of law are the province of the trial Judge and not the jury.

14 Section 220(4) requires the trial judge to identify specific factual circumstances that, if proved, give rise to a legal requirement obliging the accused to deal with property in a particular way. The identification of those circumstances is properly a matter for the judge, because it may require the interpretation of contractual documents or a determination as to whether legal obligations flow from the particular relationship or conduct of the parties.

15 Where there is no dispute about the facts allegedly giving rise to the requirement, the judge will be able to determine as a matter of law whether or not the requirement exists. All the jury will have to determine are the remaining questions of fact.

16 Where there is a dispute about the facts allegedly giving rise to the obligation, the judge will be required to premise his or her determination on the basis that the Crown will be able to prove those facts. In that event the judge's determination of the legal position will be conditional upon the jury's factual findings. The judge will then need to provide the jury with directions (whether by question trail or otherwise) regarding the factual matters the Crown must prove in order to establish guilt.

17 The question of law must obviously be determined in light of all the evidence. Where the judge makes the determination at the conclusion of the Crown case, it will be necessary for him or her to revisit the issue in the event that the defence elects to call evidence.

18 In the present case the Judge heard argument on the question he was required to determine under s 220(4) at the conclusion of the Crown case, and delivered a reasoned ruling in relation to it before requiring the defence to make its election. 3 The defence then elected not to call evidence, so it was not necessary for the Judge to review his ruling before counsel delivered their closing addresses.

19 The Judge began his ruling by stating:

[6]…reference to the specifics of the link between the payment to Blackbird Finance and the GST refund and the circumstances surrounding that is beyond the true scope of the question of law that I have to determine, which is focussed on the general relationship between the parties rather...