New Zealand Credit Law Bulletin - Vol 5, No 1, January 2005
A free, plain English review of recent law and items of interest for creditors, produced by Hattaway & Associates Ltd, Credit Consultants. To subscribe, visit the New Zealand bulletin index and enter your details on the right
Plain language disclaimer:
This bulletin is not legal advice. Do not make decisions on legal matters based on a brief commentary. Instead, get professional legal advice.
In this issue:
- Lenders seeking guarantees - beware!
The Court of Appeal says, “…we think it highly likely that the Etridge approach ...will be applied in this Court... So those seeking guarantees would be well advised to allow for the possibility that - Is it possible to get judgment against a dead person without their estate being represented?
Contractual dispute continues after one party dies - The important difference between a guarantee and an indemnity
Would brother escapte liability due to extension of time to pay? - The Court of Appeal looks at Property Law Notices
Specifically, it looks at s90, where accepting an overdue interest payment can require a lender to give another 3 months notice. - Mortgagee's demand gets unintended result
Mortgagor subsequently convicted of arson - Company issues bankruptcy proceedings for an Australian debt in a New Zealand Court
Did this mean that all matters relating to the Australian debt were now subject to New Zealand law? - Statutory demands... strike again
Court explains rules for challenging a statutory demand - PPSA: You fail to register at your own peril!
Company loses security rights to a valuable stallion - What happens when you incorrectly fill out a credit application form?
Even if it doesn't lead to a loan, you may end up going to jail.
1. Lenders seeking guarantees - beware!
Hogan v Commercial Factors Ltd & Anor [2004] NZCA 269
In 1983 EPM Films, Papers and Pens Limited (“EPM”) was incorporated by Grant Hogan and his business partner. The business partner eventually sold out. In 1984, Grant’s parents, bought into EPM. Grant's father, Murray, was appointed as a director. Murray and his wife eventually sold their shareholding in 1990 but Murray maintained his interest in the company as a director.
During the 1990s Murray was involved in running the office of EPM and looking after administration generally. This involvement meant that he was directly involved in EPM’s refinancing in 1997. Murray approached a finance broker, who in turn approached Commercial Finance & Securities Ltd (“Commercial”).
Commercial provided finance but required guarantees. The guarantees were signed by two couples - Grant and his wife, and Murray and his wife. The guarantee signed by Murray and his wife contained a mortgage over their house in Auckland and a chattel mortgage over their launch. When these guarantees were signed in 1997 Murray was approximately 72 years old and had been retired for 13 years. At this time Murray and his wife were owed around $100,000 by EPM.
Murray resigned as director of EPM in 2000. Two years later EPM defaulted on its loan from Commercial. A receiver was appointed on 17 May 2002 and EPM went into voluntary liquidation. Commercial seized Murray’s launch and sued the guarantors.
Grant’s wife, Hilary, didn’t defend the claim. Murray’s wife was found to have a defence of undue influence by the judge who declined to enter summary judgment. Grant’s Credit Contract Act defence failed. Murray’s defence of undue influence also failed.
Murray appealed to the Court of Appeal.
It was found at the trial that Murray was the person from EPM who primarily dealt with Commercial. The requirement for guarantees by Commercial was clearly stated in various letters addressed to EPM and marked for Murray’s attention. According to Commercial (whose evidence was not challenged by Murray on this point) some of the correspondence between Commercial and EPM included valuations, initialled by Murray, of the Hogan Senior’s house property and the launch.
One question for the judges was whether or not to apply the requirements from the leading case on this area coming out of the House of Lords (the highest appellate court in the United Kingdom) commonly referred to as Etridge. Etridge was a conglomeration of different cases, all heard together, where they had similar fact patterns involving wives signing guarantees for money advances to their husbands. Etridge established a regime which protects wives from misrepresentation and undue influence but still allows for the use of domestic assets (such as houses and launches) as security for business loans.
However, the New Zealand Court of Appeal refused to follow Etridge definitively. They believed that it was better left to a case which better resembled the facts from Etridge.
However, the court said, “…we think it highly likely that the Etridge approach as to when creditors are on inquiry will be applied in this Court, at least in banking cases… There would, of course, be difficulties in both logic and principle in distinguishing between banks and other financiers. So those seeking guarantees would be well advised to allow for the possibility that the approach taken [in Etridge] will be applied in New Zealand and to act accordingly."
Under the Etridge approach the lender should find out who the guarantor’s own solicitor is and arrange the appointment and, if necessary, also provide the solicitor directly with a list of things which the lender wants the solicitor to advise the guarantor of.
Murray argued that his reasoning had become “impaired” when he “acted imprudently in providing further accommodation to EPM which already owed him a good deal of money”. On the facts of the case, the court found that there was no evidence that Murray was subject to any unfair behaviour or over-reaching conduct by Grant, his son, or anyone else on the part of EPM. There was no allegation raised at all of any undue persuasion from Grant to Murray. The court reasoned that it would be “artificial in the extreme” to regard EPM (acting through Murray) as having exercised undue influence on Murray. Likewise, the finance agent, acting under Murray’s instructions to secure the new finance, could not be held to have unduly influenced Murray when the agent was in fact acting under Murray’s own instructions.
In the end, Murray was found to have driven the refinancing to Commercial. He was owed a large amount of money by EPM and it was seen, therefore, as being in his interests that the refinancing occurred. The appeal was dismissed. Murray was liable under his guarantee.
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2. Is it possible to get judgment against a dead person without their estate being represented?
Mr Cathie did some repiling work on Dr Zoltan Shardy’s house. A dispute arose and Dr Shardy commenced proceedings in the District Court in 1992. He sought a “declaration” that there had never been a contract between them and damages under the Fair Trading Act 1986. Mr Cathie counter-claimed for work that had already been carried out under a contract to repile Dr Shardy’s house. Mr Cathie claimed that the contract had been wrongly repudiated by Dr Shardy.
Repudiation is where a party is seen to have reneged on obligations under a contract (before the contract has been fully completed). Once a party has ‘repudiated’ a contract then the other party can treat the contract as having come to an end and does not have to perform any more of his obligations under the contract. People often argue that a contract has been repudiated as a defence to a lawsuit against them for payment or performance of a contract.
Years of “protracted skirmishing” meant that the proceedings had still not reached trial in 2000. Then, in April of that year, Dr Shardy died.
Shardy’s death prompted Cathie to take a new interest in the case and a trial date was obtained. The judge at this initial hearing was concerned that there was only one party to the proceedings – an extreme rarity in legal proceedings – but was persuaded by Cathie’s lawyer not to make Simes, Shardy’s executor (the person charged with consolidating and distributing the estate), the other party to the hearing. However, the judge did require that Cathie serve Simes (the executor) with a copy of his counterclaim before final judgment in the case was made.
The counterclaim was served on Simes but he never took any action on it. Cathie then applied for a fixture for the final hearing and a notice of this was sent to Simes. This notice was returned to the court undelivered. Simes never attended because he never knew about it. At the trial the court found in favour of Cathie and awarded him $5406 plus interest as well as legal costs.
Upon learning that a judgment had been entered against Shardy’s estate, Simes applied to have it set aside. Cathie argued that Simes could not, in law, make such an application because he “was not a party to the proceedings”. The judge at this trial accepted this argument and refused to allow Mr Simes application. Simes appealed.
The appeal court held, unanimously, that it is not possible for a court to enter judgment against a person who is known to be deceased. Mr Cathie needed to have the deceased’s legal representative substituted into the hearing if he wished to proceed to a judgment.
It was the court's opinion that the whole debacle arose “from a misguided attempt to obtain a judgment against a dead man and to avoid having to deal with live opposition in the form of the dead man’s executor.”
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3. The important difference between a guarantee and an indemnity
Peters v NZHB Holdings Ltd [2004]
NZHB is a financier. One of its finance products is called a “Homebond” which allows a home-buyer to borrow the deposit on a real estate purchase. Repayment is expected at the settlement of the transaction.
Symon Peters wanted to buy a property in Wellington. The seller was his brother, Jamie Peters', company, Caravelle Holdings Ltd. NZHB funded a deposit for Symon. Jamie provided a guarantee to NZHB. Jamie’s company purchased the property and immediately on-sold it to Symon at a profit.
But Symon didn’t repay the bond on the due date. Extensions were granted but he still was unable to pay. NZHB then sought payment under the ‘deed of indemnity’ that Jamie had entered into. Jamie refused to pay so NZHB sued him.
The issue in the case was whether the deed that Jamie signed was a guarantee or an indemnity. The basis for a guarantee is that the person giving the guarantee must be able to enforce the original contract. This becomes legally impossible where the original contract has been varied. Because of this legal impossibility, the person giving the guarantee is then relieved, in law, of his or her obligation.
NZHB had granted time extensions to Symon in an attempt to get payment from him. In law, the extensions had the effect of varying the contract between Symon and NZHB. Jamie argued that he had signed a guarantee. He guaranteed the original contract, but when a variation was made, that variation had the effect of changing that original contract. He had provided no guarantee for the "new" contract therefore he was relieved of his obligations. If the court accepted that it was a guarantee, Jamie wouldn’t have to pay.
An indemnity is slightly different. It's where a person pledges to be responsible for any loss for which another might suffer – not just that arising from the other person’s failure to perform. NZHB argued that it was a deed of indemnity. If so, Jamie would be liable for any losses incurred by Symon, including those arising from a variation in the original contract.
At the initial court hearing the judge found that the document was an indemnity. Jamie appealed to the Court of Appeal who agreed with the High Court judge. The Court gave two main reasons.
First, the document which Jamie signed as security for the loan to Symon was headed “Deed of Indemnity”. Although a title is not conclusive, it was found to have given a strong indication of the intention of the parties.
Second, the deed used the word “indemnify” in describing Jamie’s obligation. Because this was further defined, in the loan agreement, as being “for any [our emphasis] loss, claim, demand or expense…” it clearly showed a liability much wider than a simple guarantee.
So, in the end, Jamie was found to have signed a deed of indemnity. He was therefore liable for his brother’s inability to pay. To rub salt into his wounds, the court upheld the trial judge’s finding that the indemnity deed also provided for “reasonable legal expenses incurred in enforcing payment under the deed” – which meant that Jamie was also subject to a further $58,164.51 for NZHB’s legal bills.
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4. The Court of Appeal looks at Property Law Notices
Savill v Damesh Holdings Ltd [2004] 2 NZLR 289
Damesh Holdings Ltd lent $1.54 million to Trevor Lee and Simon Savill under a fixed term loan. The interest was agreed at 15% to be paid on 3 specific days, 15 February, 15 March and 17 April 2002, with the principal also due on 17 April. The loans were secured by four other people who provided security by mortgaging various properties that they owned. Savill and Lee didn't provide security. The loan agreement provided for 22% penalty interest.
None of the payments were made by 17 April. On 3 May, Savill paid a sum of $20,000 to Damesh – which Damesh then allocated in proportion against the first and second interest payments. On 17 May, Damesh served on the guarantors of the loan “notices of default” under section 92 of the Property Law Act 1952. The notices required full repayment by 28 June. As a result of one of the guarantors selling a mortgaged property, Savill was able to make a payment of $958,950 to Damesh. Nothing more was paid.
On 28 February 2003, Damesh applied to the High Court for a summary judgment against Savill and Lee for the balance outstanding together with outstanding interest at 22% from that date. The outstanding amount was approximately $932,000. The High Court ruled in favour of Damesh and ordered Savill and Lee to pay that outstanding amount.
Savill then appealed to the Court of Appeal. At the trial, Savill, argued that section 90 of the Property Law Act applied. Section 90 states that where a person has defaulted on their mortgage payments but a subsequent interest payment has been accepted, the lender must give an additional 3 month notice before it can call on the mortgaged properties. The purpose of section 90 is to “prevent mortgagors who have continued to pay interest on overdue mortgages, and thereby been lulled into a sense of security, from being called upon on less than 3 months’ notice”. For this section to apply, all other requirements of the mortgage must still have been adhered to.
The Court of Appeal didn't accept the argument. The judges said, "the underlying principle of s 90 is that only those giving security over land are to have protection under the section... Overall we see no reason to depart from the ordinary meaning of the text read in its context on which the section applies to mortgagors alone and not to those borrowing under the type of arrangements entered into in this case. Section 90 does not protect borrowers who have not themselves given mortgage security." Savill hadn't given mortgage security therefore he was not entitled to any further notice.
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5. Mortgagee's demand gets unintended result
R v Campbell (CA375/03; Court of Appeal, 2 August 2004)
Donald Campbell and his ex-wife jointly owned a house. The property was heavily mortgaged. The first mortgage fell into arrears. On 30 September 1993, the first mortgagee sent a letter to Campbell demanding that the property be sold to repay the mortgage. A witness at the subsequent trial said that Campbell told her that he could not pay, that he did not want his ex-wife to have the house, and that he would “put a match to it”.
Within a month there was a fire at the house. Approximately 10 percent of the house was damaged. Firemen concluded that the fire was not an accident. An investigation by a fire investigator indicated that newspaper soaked in diesel had been wrapped around timber framing under the house but this did not appear to have a connection with where the fire began.
Campbell’s ex-girlfriend, Lynn Newman, also gave evidence. She said that Campbell had admitted trying to set fire to the house on three or four occasions. For one of these attempts he had used the materials found by the fire investigator. She said that he had finally managed to light the fire by spreading fuel around the house and lighting an assortment of candles at strategically placed locations around the house.
Campbell was convicted in the District Court of one count of arson and one further count of attempted arson. He was sentenced to two years imprisonment on 15 February 1995. He appealed the conviction and the sentence.
At the appeal Campbell claimed that his ex-girlfriend had lied on the witness stand and that he had alibi evidence that he was somewhere else when the fire started. He was not able to prove these claims, however, because his witnesses never showed up. In any case, the court questioned the relevance of any alibi evidence. Newman’s evidence was that Campbell had told her that he had started the fire at 2pm and the police’s evidence was that Campbell had acknowledged in his initial statement that he was at the property at that time.
The Court of Appeal dismissed the appeal saying that there was ample evidence available “upon which the jury was entitled to convict”. Campbell was forced to serve his sentence.
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6. Company issues bankruptcy proceedings for an Australian debt in a New Zealand Court
Wickham v Moloney & Anor (CIV 2003-419-1687; HC, Hamilton, 17 June 2004)
Bells Securities Pty Ltd is a company incorporated in Queensland. In August 1997 it advanced funds to Wickham Developments Ltd (also a Queensland incorporated company). Wickham Developments gave security over a property about to be developed into a 53-roomed motel complex in Brisbane. Robert Wickham, a director of Wickham Developments, personally guaranteed the loan.
In October 1999 Wickham Developments defaulted on the loan. Bells sued Wickham Developments and Robert Wickham obtaining judgment against them for AUS $4,250,000. Wickham appealed to the Queensland Court of Appeal but the appeal was dismissed.
Wickham then shifted to New Zealand. On 22 March 2001 Bells registered the Australian judgment in New Zealand pursuant to the Reciprocal Enforcement of Judgments Act 1934. This allowed Bells to pursue its judgment debt in New Zealand with the backing of New Zealand law.
In June of 2002 Greg Moloney and Peter Geroff were appointed as liquidators of the Managed Investment Scheme which was formerly Bells. Moloney and Geroff issued a bankruptcy notice for the unpaid balance of the original Australian judgment in the New Zealand High Court.
On 14 November 2003, Wickham applied to set aside the bankruptcy notice. Wickham believed that he had a counterclaim which equalled the amount of the Australian judgment. This involved contractual matters with respect to the motel in Brisbane.
On 27 November 2003, the judge allowed Wickham time to file his counterclaim. Wickham filed it, in New Zealand, on 16 December 2003. Moloney and Geroff then objected saying the matter was being heard in the wrong jurisdiction. They argued that because the matter dealt with companies, documents, land and people, all of whom were in Australia, it would be in the interests of justice for the matter to be dealt with by Australian Law.
However, Wickham claimed that because Moloney and Geroff issued bankruptcy proceedings against him, in a New Zealand court, they had submitted to the jurisdiction of New Zealand Law. This would mean that they had to answer Wickham’s counterclaims in a New Zealand Court.
The court said that there can be no submission to New Zealand jurisdiction simply by the issue of a request to enforce a judgment debt. All the companies associated with this dispute were formed in Australia. The nature of Wickham’s counter-claim was based on a contract made in Australia. The motel and land in question were on Australian soil. The matter should therefore be determined by an Australian Court.
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7. Statutory demands... strike again
Markham 2000 Ltd v Max & Co Ltd (CIV-2004-404-2376; HC, Auckland, 23 Nov 2004)
Markham 2000 Ltd is involved in the building sector. It contracted Max and Company Services Ltd to perform some concreting of driveways and “other associated works”. Max completed the jobs and issued invoices. Markham consistently failed to pay. Max issued a statutory demand. A statutory demand is the first step to winding a company up. Failure to pay is evidence that the debtor company is insolvent.
The demand related to six invoices totalling $24,500. However, the demand (and each supporting invoice) said they were issued by Max & Co Ltd rather than Max and Company Services Ltd
Markham applied to the have the statutory demand set aside on two grounds:
* first, that the demand is a nullity because there is no company named “Max & Co Ltd”; and
* second, that there is a genuine dispute as to the amount of the invoices and over defective workmanship.
The law states that a statutory demand issued by an incorrectly named company is a nullity. This is because, if the named company was paid, it would not be able to give a discharge of debt. However, a mere defect or irregularity is not a sufficient ground to set aside a statutory demand. The court stated that the test is whether the defect would cause a “substantial injustice” if it were not set aside.
The court concluded that the incorrect name was an obvious mistake and that Markham would not suffer an injustice by allowing Max to change its name. The judge noted that Markham had in fact paid one invoice to Max, even though it also had the incorrect name printed on it. Markham, the court believed, knew exactly which company had issued the statutory demand.
Second, the court looked at the nature of the dispute. The law states that the party who is trying to set aside the demand must establish a “fairly arguable basis” for its claim to succeed. Here, Markham listed several items including allegations that the hours worked were “manifestly excessive”; that the rates charged for concreting were excessive; and that Max had left rubbish behind on the site incurring removal costs.
The court questioned Markham’s genuineness of its dispute. It stated that Markham had “ample opportunity” to make a challenge to the sums of the invoices, yet failed to do so. The court did find for Markham on the claims that it was able to substantiate, but was critical of many of Markham’s disputes, referring to a "broad-brush attempt by Markham to raise disputes in support of its application, but which because of a lack of particularity, undermine the credibility of other disputes raised.”
Overall, the court deducted from the demand any disputes that Markham could substantiate, but didn’t agree to set aside the substantial portion of the sum that was owed. The judge gave Markham 1 month to pay the amount outstanding or face liquidation.
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8. PPSA: You fail to register at your own peril!
Waller & Ors v New Zealand Bloodstock Ltd & Anor (CIV 2004-404-004093; HC Auckland, 2 December 2004)
Glenmorgan Farm Limited granted a debenture to S H Lock Ltd on 17 November 1999. This allowed S H Lock to obtain security over all “present and future assets” of Glenmorgan. “Assets” were further defined in the debenture to include “all property”.
On 31 August 2001 Glenmorgan entered into a “lease to purchase” agreement with New Zealand Bloodstocks Limited (NZBL) to acquire a stallion, called “Generous”.
The PPSA came into force on 1 May 2002. The PPSA allows for registration of security interests in personal property (chattels). S H Lock registered its security interest, created by the debenture, on this day.
Glenmorgan’s lease to purchase agreement fell into arrears. A second lease to purchase agreement was entered into with NZBL. This agreement was to expire on 28 March 2004 (almost 2 years later). Neither of these lease agreements were ever registered under the Act.
Glenmorgan’s payments again fell into arrears. It failed to pay in response to a demand for payment of all monies. On 6 July 2004, NZBL terminated the lease agreement and took possession of Generous.
On 23 July 2004, Glenmorgan defaulted on its debenture to S H Lock, which appointed receivers to Glenmorgan. The debenture sum owing to it, at this stage, was just over $3 million.
The receivers, Waller and Agnew sought a ruling that they were entitled to Generous. They claimed S H Lock was entitled to Generous because it had registered its interest under the PPSA giving it priority under the Act.
NZBL claimed that Glenmorgan’s leasehold assets should not be included in the assets secured by S H Lock’s debenture. Under the lease to purchase agreement NZBL was to remain the owner until Glenmorgan had completed the agreement. Glenmorgan failed to complete their lease to purchase agreement therefore NZBL were the true legal owners of Generous.
However, the court found that S H Lock’s debenture agreement expressly covered all “property” of Glenmorgan’s. The term “property” was deemed wide enough to cover a leasehold interest. The debenture security therefore covered Generous. The court also found that, under section 17 of the Act, a lease for more than a year is also deemed a security interest. Therefore, there were two parties with a security interest over the same item.
NZBL also argued that once Glenmorgan had defaulted on the lease agreement it was able to take possession and ownership of Generous. NZBL’s interest was therefore that of “owner in possession” and no longer a security interest.
However, the court said that in the case of a lease to purchase transaction, “it is the lessee [person renting property] who is to be treated as the owner of the goods for registration and priority purposes, and not the lessor.” The PPSA is authoritative on these sorts of issues of ownership.
Ownership, under the Act, requires perfection. A perfected interest comes ahead of an unperfected interest. Perfection is achieved by either taking possession of the security interest, or by registering it. S H Lock registered its security interest, thus perfecting it. NZBL had taken possession of Generous. However s41 expressly states that the taking of possession by seizure or repossession is not deemed to be possession under the Act. So S H Lock had perfected its interest but NZBL had not. S H Lock therefore had priority to Generous.
There was also a dispute over £175,000 (approx NZ$525,000) of stud fees. The Stud fees appeared to be “proceeds” from the lease of Generous to an English Stud Farm. The general rule, under s45 of the Act, is that “proceeds” from the collateral (Generous) flow in order of priority. This means that S H Lock, who had priority, would also get the stud fees.
However, NZBL argued that an exception under the PPSA applies. The exception is where the stud fees were assigned directly to NZBL, by-passing Glenmorgan completely. The court held that this was arguable and declined to allow summary judgement in favour of S H Lock and the receivers for the stud fees.
The case gives consideration to a number of Canadian cases. (The New Zealand Act is based on Canadian law.) However, ultimately, this appears to be a fairly straightforward case between a creditor which knew it had to register its security and of a creditor which didn’t know it had to register. Had NZBL registered its security within the transition period provided for under the Act, it would, in our view, have had priority. It would have had a PMSI – purchase money security interest – over goods it had provided which would have come ahead of S H Lock’s “general” security.
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9. What happens when you incorrectly fill out a credit application form?
R v Deborah Isabel McGrouther CA 349/03 11, 22 March 2004
Deborah McGrouther was charged with three counts of conspiring to defraud and four counts of using a document with the intent to defraud. These all involved her actions on or about 5 October 1998, in Christchurch. The main charge was under s229A(b) of the Crimes Act 1961.
The Crown alleges that McGrouther, along with an accomplice, completed and signed a false loan application form. The form was given to a mortgage broker, Mortgage Solutions Ltd, with the intention that it be given to lenders to raise finance. Mortgage Solutions did not pass on the loan application form to any prospective lender. The loan application was for $356,800 in relation to Units 1 and 2, 174 Clarence Street, Christchurch.
Section 229Aof the Crimes Act, applied to this situation, requires the prosecution to show that McGrouther
1. used, or attempted to use,
2. a document [or a document which is capable of being used]
3. for the purpose of obtaining a pecuniary [financial] advantage
4. with the intent to defraud
(It is important to note that Section 229A of the Crimes Act has been replaced with a new Section 228. The new section is substantially the same except for a change to the intent element. The “intent to defraud” changes to a requirement that McGrouther acted “dishonestly and without claim of right”. This simply means that the prosecution would now have to show that McGrouther did not believe that she was allowed to use the document in the way that she did, rather than she actually intended to commit the fraud. Effectively, this makes it easier to prove fraud.)
McGrouther alleged that she should not be found guilty of any of the fraud charges because none of the loan documents were actually “used” to gain any financial benefit. This was because none of the documents were ever received by any prospective lender and therefore did not defraud anyone.
The judge didn’t agree. He focused on the term “capable of being used”. He said that by using the word “capable” the Crimes Act covers the scenario where there is a potential for the document to be used to commit fraud. Here, when McGrouther gave the document to Mortgage solutions, she created a potential for fraud to occur.
The judge explained the situation by noting a contrasting hypothetical situation. If McGrouther had completed the document but merely left it in a drawer and not handed it to the mortgage broker, she would not have created the potential for fraud.
The court found that McGrouther had committed fraud by attempting to use a document which was capable of being fraudulent. It found that her purpose of giving the document to the mortgage broker was to have the mortgage broker pass the document on to a lending institution to obtain the financial advantage. And all of this was completed with the knowledge that the loan document was false.
The judge backed up his finding by referring to similar cases on the point.
In R v Fowlds, the accused wrote a letter to Work and Income New Zealand (“WINZ”), which he gave to a sub-tenant, who was to pass it on to WINZ. The letter apparently attempted to induce a fraudulent advance by WINZ to himself. The court, here, said it was enough for a conviction under section 229A that the accused gave the letter to another person for the purpose of presenting it to WINZ.
In R v Dakers, the accused obtained a number of uncancelled winning tickets from the TAB. The tickets were sent to the TAB. Before the TAB paid out, the manager checked the company records and found that the tickets had already been paid out on. The court stated that the document was “used” when the tickets were sent. It did not matter that the purpose for which they were sent, that is, double claiming on a winning ticket, was not successful. As soon as the tickets were sent it was sufficient.
In R v Hansard, the accused altered a weighbridge docket. The weighbridge docket was intercepted by a company manager who suspected that it was fictitious and didn’t act on it. The accused tried to argue that because the docket was obviously fictitious then it was never capable of being “used” to gain a financial benefit. However the charge in that case was of an attempt to commit fraud which means that simply because the purpose wasn’t successful does not mean that criminal liability can be avoided.
The judge sentenced McGrouther to 1 year imprisonment.
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