The Queen v Edward Oral Sullivan Robert Alexander White Lachie John McLeod Terrence William Hutton and Graeme Robert Brown

• Jurisdiction: New Zealand
• Judge: HEATH J
• Judgment Date: 11 March 2013
• Neutral Citation: [2013] NZHC 454
• Docket Number: CRI 2011-076-1948
• Court: High Court
• Date: 11 March 2013

The Queen

and

Edward Oral Sullivan

Robert Alexander White

Lachie John Mcleod

Terrence William Hutton

and

Graeme Robert Brown

[2013] NZHC 454

CRI 2011-076-1948

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

Application for transfer of trial from District Court to High Court — accused company directors and senior officers were alleged to have deliberately made false statements in prospectuses to induce the public to subscribe to securities and to have made false representations to induce the Crown to execute a deed of guarantee — following receivership, the Crown paid out $1.58 billion to meet the claims of secured creditors, and took over the securities held by the debenture trustee — whether it was in the interests of justice to transfer the proceeding to the HC.

Counsel:

N F Flanagan and P Gardyne for Crown

P H B Hall and K H Cook for Mr Sullivan

R B Squire QC for Mr White

Appearances on behalf of Messrs McLeod, Hutton and Brown excused

Counsel:

C Carruthers QC, PO Box 350, Wellington

P H B Hall, PO Box 3750, Christchurch

R B Squire QC, PO Box 10157, Wellington

J H M Eaton, PO Box 13868, Armagh, Christchurch

R Raymond PO Box 9344, Tower Junction, Christchurch

JUDGMENT OF HEATH J

This judgment was delivered by me on 11 March 2013 at 2.45pm pursuant to Rule 11.5 of the

High Court Rules

The application

1 On 31 October 2012, Messrs Sullivan, White, McLeod, Hutton and Brown were each committed for trial in the District Court at Timaru on charges arising out of the collapse of South Canterbury Finance Ltd (South Canterbury). The charges allege that the accused acted dishonestly, primarily in relation to the issue of prospectuses, between November 2004 and February 2010. South Canterbury was placed in receivership by the trustee for first ranking secured debenture holders on 31 August 2010. At the time of receivership, the deficiency to that class of creditors was approximately $158 billion.

2 The Crown applies under's 28J of the District Courts Act 1947 1 to transfer the proceeding for trial in the High Court. The application is opposed by Messrs Sullivan and White. Messrs McLeod, Hutton and Brown each abide the decision of the Court.

The Crown case

3 At material times, Mr Sullivan and Mr White were directors of South Canterbury Finance Ltd (South Canterbury). The remaining accused were its Chief Executive Officer (Mr McLeod), company accountant (Mr Hutton) and Chief Financial Officer (Mr Brown). While not all accused have been charged with each offence, the charges involve alleged false statements by promoters (x5), theft by a person in a special relationship (x3), obtaining property by deception (x2) and false accounting (x2).

4 The most serious allegations are made against the two directors, Mr Sullivan and Mr White. At the risk of over-simplifying them, the Crown assert that each was a party to the making of deliberately false statements in prospectuses issued to members of the public, to induce them to subscribe to securities offered by the company. The first prospectus in relation to which that allegation is made was on issue between 19 November 2004 and 28 October 2005. The last (in respect of

which only Mr Sullivan is charged) was available to members of the public between 20 October 2009 and 9 February 2010. The Crown intends to link the losses of approximately $158 billion to subscriptions made on the faith of the alleged false representations

5 In addition, Messrs Sullivan, White and McLeod are alleged to have used false financial statements in the name of South Canterbury to induce the Minister of Finance to execute a Crown Deed of Guarantee (Non-Bank Deposit Taker) document (dated 19 November 2008) which had the effect of guaranteeing any losses suffered by the secured debenture holders.

6 Ultimately, those investors who were owed money by South Canterbury at the time of receivership were paid out by the Crown. Having paid a sum of approximately $158 billion to meet the claims of secured creditors, the Crown took over the securities held by the debenture trustee.

The transfer application: legal principles

7 Section 28J(1) and (2) of the District Courts Act states:

28J Transfer of proceedings

• (1) Where any person is committed under section 184N of the Summary Proceedings Act 1957 to a District Court for trial, …, the accused person or the prosecutor may, either before or after an indictment is presented, apply to a Judge of the High Court for an order directing that the person be tried in the High Court.

• (2) If it appears to the Judge, after giving the accused person and the prosecutor reasonable opportunity to be heard on the matter, that the accused person should be tried in the High Court, he may order that the proceedings be transferred to the High Court for the trial of the accused person at the place specified in the order.

  ….

8 It is common ground that the touchstone for deciding whether a proceeding committed to a District Court for trial should be transferred to the High Court is the “interests of justice”. While that phrase is not used in s 28J, there is a consistent line of authority holding that, in determining whether the High Court is a more appropriate forum for trial than a District Court, a number of factors must be taken into account and weighed in the balance: in particular, see R v Boland 2 and R v O'Brien 3 This Court is required “to reach a firm conclusion that the interests of justice require” this particular proceeding to be removed to this Court for trial 4

9 During the course of argument, Mr Squire QC, for Mr White, submitted that a slightly more onerous test should be applied, with the consequence that this Court should have a “clear conviction” that the trial should be heard by it. I prefer the approach taken by Eichelbaum J in Boland and O'Brien. That approach reflects the fact that, prima facie, a trial on charges such as these will be held in a District Court. Having said that, on the facts of this particular case, I would have reached the same result, whichever way the test was expressed.

The relevant factors

10 The authorities identify various factors that should be weighed in determining whether a trial should be heard in the District Court or the High Court. Those factors reflect the criteria used when a High Court Judge is exercising the (so called) “middle-banding” jurisdiction to determine whether cases in which accused have been committed for trial in the High Court should be transferred to the District Court. They are 5

• (a) Gravity of the offence charged,

• (b) The complexity of the issues likely to arise in the proceeding,

• (c) The desirability of the prompt disposal of trials, and

• (d) The interests of justice generally.

11 Recently, Parliament has re-stated the factors to be taken into account, in the context of a determination whether (what is termed) a “protocol offence” should be tried in the High Court, rather than a District Court 6 While generally reflecting the factors to which I have referred, Parliament has said that “the likelihood that the proceeding will be of wide public concern” and “the respective workloads of the High Court and the...