KHAN v R [2022] NZCA 417

KHAN v R [2022] NZCA 417 [7 September 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA160/2022[2022] NZCA 417BETWEEN MOHAMMED MASROOF KHANAppellantAND THE QUEENRespondentHearing: 15 August 2022Court: Katz, Wylie and Palmer JJCounsel: R P Chaudhry for AppellantA F Devathasan for RespondentJudgment: 7 September 2022 at 10:00 amJUDGMENT OF THE COURTA The application for leave to appeal out of time is granted.B The appeal against conviction is allowed.C The conviction is quashed.D The sentence imposed is set aside.E No retrial is ordered.____________________________________________________________________REASONS OF THE COURT(Given by Wylie J)Introduction[1] On 15 October 2018, the appellant, Mohammed Khan, was convictedfollowing a trial before a jury in the District Court at Hamilton of one charge of causingloss by deception.1 Mr Khan was ordered to pay reparation of $26,656.49,2 and on30 April 2019 he was sentenced to six months' community detention .3[2] On 4 April 2022, Mr Khan filed a notice of appeal against both his convictionand the sentence imposed.Leave to file an appeal out of time[3] The appeal was filed out of time by some two years and one month.(a) Mr Khan has filed an affidavit explaining the reasons for his delay. Hesays that he experienced financial difficulties as a result of hisconviction and that his wife did not support him lodging an appeal.(b) The Crown submits that the reasons offered for the delay areunsatisfactory. Nevertheless, it acknowledges that the appeal has meritand should succeed. Accordingly, it did not oppose an extension oftime for the filing of the notice of appeal.[4] The interests of justice must prevail. Notwithstanding that the reasons givenfor the failure to appeal within time are not particularly satisfactory, we grant leave tofile the appeal out of time.Background[5] Mr Khan went to trial with two co-offenders, Vimlesh Chand andAshaad Hussain. A third co-offender — Sanita Singh — had pleaded guilty prior totrial.[6] The Crown alleged that all four defendants participated in a scheme ofdeception that caused loss to a finance company, New Fields Ltd. The company tradedas Interface Financial (Interface) in the business of invoice factoring. It purchasedinvoiced debts from the vendors of goods. It was paid by the vendors' customers on1 Crimes Act 1961, s 240(1)(d).2 R v Chand DC Hamilton CRI-2017-019-4282, 3 December 2018 (minute of Judge Spear) at [7].3 R v Hussain [2019] NZDC 1270 at [20].due date. The advantage for the vendors was that they obtained cashflow. Interfaceobtained reimbursement from the customers and charged the vendors for its services.To guard against the risk of default, Interface used standard customer and debtverification processes. It did background checks on the customers named in theinvoices. It called the customers to verify their identities. It obtained from eachcustomer a "notification of sale form" in which the customer confirmed that the debthad been incurred, that it was not disputed, and that it would be paid to Interface.[7] Mr Chand and Ms Singh operated a company called Chands Enterprises NZLtd (Chands Enterprises) which ran a store called "Big Bear". They sold assortedhomeware items and Indian goods in the store. In August 2015, they approachedInterface seeking cashflow support. Invoices rendered by Chands Enterprises to itscustomers were provided to Interface recording significant orders. Interface agreed topay approximately 90 per cent of the value of the invoices to Chands Enterprises' bankaccount and to pay the remaining 10 per cent, less its fees, when the customers settledtheir accounts.[8] Mr Khan owned a car dealership. He also had known Ms Singh and Mr Chandfor some years. The Crown case against Mr Khan was as follows:(a) In October 2015, Ms Singh and/or Mr Chand contacted Interface,advising that they wished to sell three invoices purportedly rendered toMr Khan's business by Chands Enterprises.(b) Ms Singh and/or Mr Chand provided Interface with a notification ofsale form containing details of Mr Khan's business and his personaldetails. The notification of sale form had been signed by Mr Khan.(c) Ms Gallaher of Interface contacted Mr Khan by phone. She referred tothe notification of sale form and requested that Mr Khan verify theinvoices. Mr Khan verified the invoices and agreed to pay the invoiceddebts to Interface when they fell due. Based on this assurance, Interfacepurchased the invoices from Chands Enterprises.(d) In November 2015, Interface received full payment of the invoiceddebts. The payment was made by Ms Singh and Mr Chand and not byMr Khan.(e) Interface then purchased six further invoices purportedly rendered toMr Khan's business by Chands Enterprises. Interface did not make anyfurther enquiries in relation to these invoices. It suffered a loss ofapproximately $79,000 when some of them were not paid in full.(f) When Interface discovered that a number of the repayments had beenmade by Chands Enterprises, it tried to contact Mr Khan. He was notavailable.(g) In February 2016, Interface put Chands Enterprises into receivership.It approached Mr Khan again. He maintained that the invoices weregenuine. When the receivers took steps to recover the invoice debtsfrom him, he denied having had anything to do with Interface or withMs Singh or Mr Chand.(h) At trial, Mr Khan's evidence was that Ms Gallaher contacted himseeking credit references for Ms Singh and Mr Chand because they hadpreviously purchased a car from him. He denied having any legalinterest in one of the businesses to which invoices had been renderedand denied that the signatures on the notification of sale forms were his.[9] The offending alleged to have been committed by Mr Hussain was in allessential respects identical.[10] Mr Khan and Mr Hussain were both charged with causing loss by deception,contrary to s 240(1)(d) of the Crimes Act 1961. As noted, on 15 October 2018,Mr Khan, together with Mr Hussain and Mr Chand, was found guilty of the charge.Mr Hussain's appeal[11] On 20 May 2019, Mr Hussain filed a notice of appeal. Inter alia, he allegedthat the trial Judge erred in directing the jury on the elements of the offence charged.[12] The appeal came before this Court in February 2020. The relevant question inthe Judge's question trail which was challenged on appeal read as follows:Has the Crown proven beyond reasonable doubt that [Mr Hussain] played aknowing part in the scheme of deception of [Interface] by confirming at timesthat the invoices were legitimate[?][13] This Court concluded that:4(a) It was not sufficient for the jury to only consider whether Mr Hussainplayed "a knowing part in the scheme of deception".5 The question didnot specify what knowledge Mr Hussain was required to possess or thedate at which the state of his knowledge was to be assessed. It did notrequire the jury to be sure that Mr Hussain knew, when he spoke toMs Gallaher of Interface, that Chands Enterprises would be issuingfurther false invoices in the future. The Court held that this was anessential element the Crown was required to establish to prove thatMr Hussain knowingly assisted in deceptive conduct that was causativeof Interface's loss.6(b) The reference to Mr Hussain confirming "at times" that the invoiceswere legitimate created a further difficulty.7 It was a reference toconversations that Mr Hussain had had with Interface and the receiver,but these conversations took place after the final invoices had alreadybeen purchased by Interface. Any statements made by Mr Hussaincould not have contributed to the loss sustained by Interface. The jury4 Hussain v R [2020] NZCA 85.5 At [28].6 At [28].7 At [29].may have wrongly taken them into account when considering the stateof Mr Hussain's knowledge.8Accordingly, the Court found that the jury was not properly directed on an essentialelement of the offence and that irrelevant considerations introduced by the questiontrail may have influenced the verdict in relation to Mr Hussain.9 The appeal wasallowed, Mr Hussain's conviction was quashed and a retrial was ordered.10Mr Khan's position[14] Mr Khan's position is identical to that of Mr Hussain. Both Mr Khan andMr Hussain faced the same charge. They were tried at the same time. The Crowncase against both was in all material respects the same. Both advanced similardefences. The question trails used by the Judge for Mr Khan and Mr Hussain were, inall essential respects, identical.[15] The Crown accepts that Mr Khan's position cannot be distinguished fromMr Hussain's position. It acknowledges that, given this Court's decision in relation toMr Hussain's appeal, Mr Khan's appeal must be allowed.[16] The Crown's concession is appropriate and properly made. Mr Khan's appealagainst conviction is accordingly allowed. As a result, it is not necessary for us toseparately consider the appeal against sentence.Result[17] The appeal against conviction is allowed.[18] Mr Khan's conviction is quashed.[19] The sentence imposed on Mr Khan is set aside.8 At [29].9 At [30].10 At [31]–[33].Retrial[20] This Court ordered that Mr Hussain should face a retrial. We were advised bycounsel for the Crown that a fixture was allocated for the retrial but that, in light oflengthy delays and rescheduling arising out of the COVID-19 pandemic, there werediscussions between the Crown and counsel for Mr Hussain regarding a potentialresolution. Interface, as the victim of Mr Hussain's offending, was consulted. It wasreluctant to participate in a retrial. It was only concerned about recovering the moniesit had lost. The Crown accepted that Mr Hussain had already served a sentence ofcommunity detention and that he had paid the total reparation ordered by theDistrict Court. The matter was resolved on the basis that the reparation paid toInterface would be retained by it and that no steps would be taken by Mr Hussain torecover the monies paid. The Crown then sought and obtained leave to withdraw thecharge pursuant to s 146 of the Criminal Procedure Act 2011.[21] We raised with counsel whether we should order a retrial for Mr Khan.Counsel for Mr Khan advised that he would speak to his client regarding the reparationpayment made pursuant to the sentence imposed. He has filed a memorandumadvising that Mr Khan will not seek to recover the reparation payment already madeto Interface.[22] The Crown does not, as a result, seek an order for a retrial.[23] Mr Khan has effectively served the sentence imposed. Reparation has beenpaid to Interface and Mr Khan, through his counsel, has agreed not to seek recoveryof the monies paid. No retrial is ordered.Solicitors:Chaudhry Legal, Manukau for AppellantCrown Solicitor, Manukau for Respondent