Scutts v R

• Jurisdiction: New Zealand
• Judge: Harrison J
• Judgment Date: 10 December 2015
• Neutral Citation: [2015] NZCA 599
• Docket Number: CA426/2015
• Court: Court of Appeal
• Date: 10 December 2015

Between

Peter John Scutts

Appellant

and

The Queen

Respondent

[2015] NZCA 599

Court:

Harrison, Heath and Collins JJ

CA426/2015

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against conviction following a judge-alone trial on one charge of agreeing to receive a secret reward for procuring a contract in breach of s8(1) Secret Commissions Act 1910 (SCA) (…advises any person to enter into a contract with a third person and receives or agrees to receive from that third person, without the knowledge and consent of the person so advised, any gift or consideration as an inducement or reward …) — Crown alleged that the appellant had induced a company of which he was an agent and later CEO, to enter into a contract to supply wine — trial judge had not believed one of the appellant's witnesses and had felt the other witness's testimony was not relevant — appellant said the Judge failed to give any or adequate reasons for her verdict, in particular for rejecting the evidence of his witnesses — whether the Judge's decision did not show a credible reasoning process because she failed to make express findings on the essential elements of the charge — what was the Judge's obligation to give reasons for a verdict when sitting alone — whether, where a witness' credibility and reliability were at issue, a Judge should undertake an assessment of the type suggested in E (CA799/2012) v R.

Counsel:

J R Billington QC and A J Steel for Appellant

R S Reed and R R Parlane for Respondent

The appeal against conviction is dismissed.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Harrison J)

Introduction

1 The appellant, Peter Scutts, was found guilty following a judge-alone trial before Peters J in the High Court at Auckland of one charge of agreeing to receive a secret reward for procuring a contract in breach of s 8(1) of the Secret Commissions Act 1910. 1 He was also found guilty of 16 charges of dishonestly using a document

under s 228(b) of the Crimes Act 1961. He was convicted and sentenced to home detention. 2

2 Mr Scutts appeals against his conviction on all charges but not against sentence. His primary ground, as it was recast in argument by Mr Billington QC, is that Peters J failed to give any or adequate reasons for her verdict, in particular for rejecting the evidence of the two defence witnesses. In Mr Billington's submission, the Judge failed to apply the criminal standard of proof beyond reasonable doubt in finding Mr Scutts guilty of the charges. It was common ground between Mr Billington and Ms Reed for the Crown that the result of Mr Scutts' appeal against conviction on all charges stands or falls on our determination of the Secret Commissions Act charge (the s 8(1) charge).

Statutory provisions

3 In order to give context to Mr Scutts' appeal, it is necessary to start by setting out s 8 of the Secret Commissions Act, which materially provides:

8 Receiving secret reward for procuring contracts an offence

• (1) Every person is guilty of an offence who advises any person to enter into a contract with a third person and receives or agrees to receive from that third person, without the knowledge and consent of the person so advised, any gift or consideration as an inducement or reward for the giving of that advice or the procuring of that contract, unless the person giving that advice himself acts as the agent of the third person in entering into the contract, or is to the knowledge of the person so advised the agent of that third person.

• (2) For the purposes of this section a person shall be deemed to advise another person to enter into a contract if he makes to that other person any statement or suggestion with intent to induce him to enter into the contract.

4 Adopting the language of the section, the Serious Fraud Office (SFO) charged that Mr Scutts in his capacity as agent for the New Zealand Wine Company (NZWC):

… between 2 February 2011 and 13 October 2011 at Auckland … having advised [NZWC] to enter into a contract with Liquor Marketing Group [LMG], agreed to receive from [LMG], without the knowledge and consent

of [NZWC], consideration as a reward for the giving of that advice, namely $AUD1 per case for any [NZWC] wine distributed by [LMG], such wine having been supplied by [NZWC] to [LMG] under the contract.

(Emphasis added.)

5 The 16 charges of dishonest use of documents arose from Mr Scutts' submission of invoices, issued monthly from 31 May 2011 to 13 October 2011 under the name of a different entity, Rochfort Rees Wine Company Ltd (Rochfort), to LMG for what were termed “marketing services”. On the Crown case, the invoices were the mechanism for LMG's payment to Mr Scutts of the agreed secret commission of AUD 1 per case of wine supplied by NZWC.

Factual background

(a) Parties

6 NZWC is, as its name suggests, a wholesaler of wines. Mr Scutts is a highly experienced liquor industry executive. On 17 November 2009 NZWC engaged him to act as a consultant. NZWC was in financial difficulty and wished to increase its sales in the Australian market. One of Mr Scutts' immediate priorities was to assist the company in that purpose. In August 2010 NZWC agreed to relocate Mr Scutts from Auckland to Sydney.

7 LMG is a not-for-profit corporate owned by various hotels, bars and liquor stores. The company acquires a range of alcoholic products for supply to hotels. Two of its subsidiaries were Murray Bridge Wine Company Pty Ltd and Hotel Liquor Wholesales. Two of the banners under which LMG's retailers traded were Harry Brown and Down Under Cellars. LMG had its own labels for wine which it bottled, labelled and packaged. Towards the end of 2010 LMG sought to identify other suppliers of New Zealand sauvignon blanc for its own label wines.

8 Rochfort was incorporated on 21 July 2008. At all material times the shares in the company were held jointly by Mr Scutts and his son, Oliver, or by Mr Scutts' wife and Oliver. Mr Scutts was a director of Rochfort between July and December 2008 and again from July 2010. Oliver Scutts is a young winemaker. Rochfort was set up as a vehicle through which he would learn about the wine industry under his father's guidance. Rochfort purchased grapes and engaged contract winemakers for its own wine labels. Also, as Peters J noted, Mr Scutts' consultancy income from NZWC was paid into Rochfort's New Zealand bank account.

9 At all relevant times Douglas Finlay was LMG's general manager. John Scott was his superior. Both men were known to Mr Scutts. Indeed, through their association Rochfort supplied wine to LMG in 2008, 2009 and 2010.

(b) LMG/Scutts agreement

10 Messrs Scutts and Finlay met on several occasions in Australia and New Zealand in late 2010 and in 2011 and dined together on 28 September 2010. Of direct relevance is this letter from Mr Finlay to Mr Scutts dated 20 October 2010:

20th October 2010 Peter Scutts Consultant

Rochfort Rees Wine Company PO Box 37–643

Parnell 1015 Auckland New Zealand

Peter

LMG wish Rochfort Rees Wine Company to be their provider of house controlled labels sourced for New Zealand wines.

The agreement is subject to LMG and Rochfort Rees Wine Company agreeing by 1st July each year the terms of supply for the coming 12 months, 1st July – 30th June. If an agreement of these terms cannot be reached, LMG can terminate with 3 months notice and without penalty. During this notice period supply will continue at the previous year's terms.

Rochfort Rees may during the period of agreement subcontract the supply of product to LMG. At all times Rochfort Rees is responsible for the quality of the products supplied including packaging and for third party adherence to the commercial terms agreed at the time.

As consideration for providing this service and for providing ongoing market support LMG agrees to pay Rochfort Rees $A1.00 per case sold to its retail customers via LMG's national warehouse distributors.

Yours sincerely

Douglas Finlay

GM Harry Brown Merchant Trader, Down Under Cellars.

(Emphasis added.)

11 Mr Finlay's letter is the evidential foundation for the Crown's case. The Crown says that the letter constituted the first and contested element of the s 8(1) charge: the agreement between LMG and Mr Scutts (the October 2010 agreement) whereby the latter agreed to receive from the former consideration of AUD1 per case of wine supplied by Rochfort or its subcontractor as a reward for advising NZWC to enter into a contract with LMG in 2011. Proof that the letter was sent on or about 20 October 2010 was essential to the Crown's case.

(c) NZWC/LMG contract

12 On 2 March 2011 Mr Finlay travelled to NZWC's premises in Blenheim, Marlborough where he and Mr Scutts negotiated a contract entered into later that day between NZWC and LMG (the 2011 NZWC supply contract). Mr Scutts was still at that time an independent consultant, acting in an advisory capacity for NZWC. We adopt Peters J's summary of the contract's terms as follows:

[46] The NZWC/LMG contract required NZWC to supply a minimum of 60,000 cases of Sauvignon Blanc per annum at $38 per case to LMG in Queensland and Western Australia. This Sauvignon Blanc became LMG's own label wine. The contract also provided for LMG to design the packaging, with NZWC to produce all packaging “components”, that is the wine would be shipped to Australia ready for sale. The price of $38 per case was to apply for the first 12 months, and be subject to annual review thereafter.

[47] The deal was attractive to NZWC. The quantity – 60,000 cases – was substantial and the price acceptable in the prevailing conditions, because it would be supplemented by a substantial rebate available to the company in the Australian market. As I have said, the terms of the NZWC/LMG contract were subsequently reduced to writing. NZWC's first shipment was made in May 2011.

13 The 2011 NZWC supply contract, and Mr Scutts' participation in its negotiation,...