NEW ZEALAND TRANSPORT AGENCY v WALTERS HOLDINGS (2008) LIMITED [2020] NZHC 1715

NEW ZEALAND TRANSPORT AGENCY v WALTERS HOLDINGS (2008) LIMITED [2020] NZHC 1715 [16July 2020]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECRI-2020-419-000044[2020] NZHC 1715BETWEEN NEW ZEALAND TRANSPORT AGENCYAppellantAND WALTERS HOLDINGS (2008) LIMITEDRespondentHearing: 7 July 2020Appearances: N Flanagan and B Thompson for AppellantN Brodnax for RespondentJudgment: 16 July 2020JUDGMENT OF VENNING JThis judgment was delivered by me on 16 July 2020 at 3.00 pm.Registrar/Deputy RegistrarDateSolicitors: Meredith Connell, AucklandEdmonds Judd, Te AwamutuIntroduction[1] Walters Holdings (2008) Limited (Walters Holdings) faced four charges unders 43 of the Land Transport Management Act 2003 (LTMA).1 Following a defendedhearing, Judge Down acquitted Walters Holdings on all four charges.2[2] The New Zealand Transport Agency (NZTA) seeks leave to appeal against thatdecision on two questions of law.3[3] Ms Brodnax, counsel for Walters Holdings, submitted that leave to appealshould be declined, but if leave was granted the substantive appeal should be declined.Finally, if, for any reason, the appeal was to be upheld on the question(s) of law shesubmitted that nevertheless, in all the circumstances, the charges ought to be dismissedin this Court.Legislative background[4] Fuel excise duty (FED) is charged by the New Zealand Customs Service onpetrol when it is imported or when it leaves the point of manufacture such as theMarsden Point Oil Refinery. The revenue collected from the duty is used to fund thebuilding and maintenance of New Zealand's Land Transport network.[5] In certain circumstances, persons using petrol can obtain a refund of the FEDcharged on the petrol they have used. Such refunds are provided for by s 41 of theLTMA and the Land Transport Management (Apportionment and Refund of ExciseDuty and Excise-Equivalent Duty) Regulations 2004 (the Regulations).[6] Section 41(1) of the LTMA provides:41 Refund of excise duty, excise-equivalent duty, and GST(1) Persons using any motor spirits, compressed natural gas, or liquefiedpetroleum gas are entitled to a refund in respect of excise duty, excise-equivalent duty, and goods and services tax charged on theconsideration for the supply of motor spirits, compressed natural gas,1 The charges were of making an application or furnishing information known to be false in amaterial particular for the purposes of obtaining a refund of fuel excise duty.2 New Zealand Transport Agency v Walters Holdings (2008) Ltd [2020] NZDC 5138.3 Criminal Proceedings Act 2011, s 296.or liquefied petroleum gas, to the extent that the amount of the dutythat is refunded forms part of the consideration for that supply and tothe extent specified in regulations made under section 45.[7] Section 42 sets out the procedure for obtaining a refund by application on aform approved by the Secretary (the Chief Executive of the Ministry):42 Procedure for obtaining refund(1) Every application for a refund under section 41 must be made to theSecretary on a form to be provided by the Secretary, and must besupported by any documentary evidence and any other informationthat the Secretary may require or as may be prescribed.[8] As relevant, reg 5(1) of the Regulations provides:5 Entitlement to refunds(1) A person is entitled, under section 41 of the Act, to a refund of theexcise duty, excise-equivalent duty, and goods and services taxcharged in respect of motor spirits to the extent that the motor spiritsare used—(a) as fuel in an exempted vehicle; or(e) for commercial purposes otherwise than as fuel in any motorvehicle, vessel, or aircraft.[9] Exempted vehicle is defined in reg 3. It is accepted for present purposes thefarm vehicles in issue meet the definition of exempted vehicles.[10] The offence section is s 43 of the LTMA. It provides:43 Offence and penalty(1) A person commits an offence who, for the purposes of obtaining arefund under section 41, makes any application or furnishes anyinformation that he or she knows to be false in any material particular.(2) A person who commits an offence against subsection (1) is liable onconviction to a fine not exceeding $2,000.[11] To prove an offence under s 43, the prosecuting authority, the NZTA, isrequired to prove beyond reasonable doubt:(a) a person made an application for the purpose of obtaining a refund ofFED under s 41;(b) that the application or any information provided in support of theapplication was false in a material particular; and(c) that the person knew the application or the information to be false in amaterial particular.Factual background[12] Walters Holdings owns five farm properties on which dairying operations arecarried out. The company has three directors, one of whom is Mr Robert Walters.Sharemilkers carry out the dairying operations on the properties.[13] Between 27 December 2017 and 24 September 2018, Walters Holdings madefour applications under s 41 of the LTMA for refunds of FED. The total amount offuel for which the refund was claimed over that period was 11,677 litres being petrolthat Walters Holdings claimed to have used in exempt vehicles or for commercialpurposes over the period covered by the applications.[14] Each application was on the form provided by the Secretary and followed thesame format. The form includes a section "Part B: Use of fuel claimed for refund"which requires the applicant to provide details of the exempt, unregistered vehicles tobe inserted. The applications completed by Walters Holdings attached a schedulepurporting to identify the exempt vehicles and their fuel use. In each case theattachment claimed the fuel had been used in two quad bikes and three farm bikes witha smaller amount used in chainsaws and other small motors. The form was certifiedas correct on behalf of Walters Holdings.[15] Walters Holdings provided the tanks, bowsers, and arranged regular refills byWaitomo Petroleum for the use of each farm by the sharemilkers. The fuel wasdelivered to a bulk tank located on the relevant farm by Waitomo Petroleum. WaltersHoldings then invoiced the relevant sharemilker for the full cost of the fuel that wasdelivered to the particular farm. The sharemilkers paid Walters Holdings the full costof the fuel and then used the fuel in the course of the particular dairying operation.[16] The alleged offending came to light when, after receiving advice about theirentitlement to a refund of FED, the sharemilkers applied for a refund of FED inrelation to the same fuel that Walters Holdings had claimed a refund for.[17] NZTA called evidence from two of the sharemilkers who operated farmsowned by Walters Holdings and a NZTA revenue assessment officer, Ms NatashaNapier. Mr Walters gave evidence for the defendant company.The District Court decision[18] Judge Down noted the NZTA's case was that each of the applications was falsein the following material particulars:4(a) the applications falsely represented the fuel had been used by WaltersHoldings when in fact it had been used by (and paid for) by thesharemilkers; and(b) the applications falsely represented that the fuel for which a refund wasclaimed had been used in two quad bikes and three farm bikes, with theremainder being used in chainsaws and other small motors when in factit had been used in a number of other farm vehicles.[19] The Judge accepted that the evidence established that the sharemilkers were ina "strict sense" the end users of the fuel and that they had paid the full asking price ascharged to Walters Holdings by the fuel supplier and Waitomo Fuels, and it was thesharemilkers and not Walters Holdings who had the legal and moral right to thoserefunds.5[20] The Judge also accepted the evidence established that the applications wereinadequate in the sense they identified only a handful of vehicles in which the fuel had4 New Zealand Transport Agency v Walters Holdings (2008) Ltd, above n 2, at [12].5 At [29].been used during the relevant period. Insufficient care was taken by the company'sadministrative staff in assessing what vehicles were used by what farms and theapproximate quantities of fuel used by each of those vehicles.6[21] Despite those findings, the Judge surmised that, while the legislation could beused to deal with a case arising from a brief period of double-dipping, he did notconsider that was one of the ways in which the legislators anticipated the offencewould be committed. In his view, the prime purpose clearly is and was intended tofocus on the potential abuse of the system by claiming for a refund of tax when thefuel was being used on public roads rather than on private property.7[22] Next, he considered that the relationship between farmer and sharemilker wasmore complex than "one short passage in the sharemilker agreement" which recordedthe relationship was of farm owner and independent contractor.8[23] The Judge then redefined the issues as:9(a) Could Walters Holdings properly be said to have been using the fuel inthe course of its business?; and(b) Was the failure of Walters Holdings to provide a more accurate andcomplete list of vehicles and estimates of fuel used in each of thevehicles, false in a material respect?[24] The Judge answered those questions in favour of Walters Holdings. He foundthat the simple act of making the applications for a FED refund was not, without more,sufficient to amount to a false statement that Walters Holdings was using the fuel inthe course of its dairy business. As to the second question, in broad terms, the overallamount of the duty refund claimed and the total number of litres used for each of thefour periods was not false, rather, it was just not properly supported by full evidenceas to how the fuel was used. It was also arguable that detailed evidence about the6 New Zealand Transport Agency v Walters Holdings (2008) Ltd, above n 2, at [30].7 At [43].8 At [46].9 At [50]–[55].number, type and location of the vehicles in which the fuel was used was not itselfmaterial.[25] In light of those findings, it was unnecessary for the Judge to go on andconsider whether Walters Holdings knew the applications to be false in a materialparticular.Questions of law[26] The questions of law the NZTA asks the Court to answer are:(a) Did the Judge err in law when he declined to find that the applicationswere false in a material particular in relation to a list of vehicles andassets in which Walters Holdings claimed to have used the fuel it wasclaiming a refund of despite finding that this information was "plainlyinaccurate"?; and(b) Did the Judge err in law in finding that for the purposes of determiningentitlement to a refund of FED "a sharemilker does not work as aseparate independent entity to the farm owner, but actually workswithin the farm business; in that sense they are not separate entities butclosely entwined", such as to "make it difficult to determine what entitywas using the fuel"?[27] In Brown v R, the Court of Appeal confirmed that:10"Questions of law" in the context of s 296(2) must raise one or more of thethree standard errors classified by modern authorities as creating a question oflaw:(a) a misdirection of law apparent in the decision (what Fisher Jcalled "a conventional legal question on unchallenged facts");(b) oversight of a relevant matter, or consideration of anirrelevant matter; or(c) a factual finding unsupported by any evidence, or an omissionto draw an inference of fact which is the only one reasonablypossible on the evidence.10 Brown v R [2015] NZCA 325 (2015) 30 FRNZ 471 at [16].[28] The NZTA submit that the first question of law was an error falling within thethird category and the second question of law was an error falling within the firstcategory.Leave to appeal[29] Ms Brodnax submitted that leave should not be granted to appeal as the casewas not of general application. Each sharemilking agreement is an individual contractand the terms may vary enormously. It would be inappropriate to make a decision onthe basis that this case may have wider significance where the Judge had described therelationship as complicated.[30] For the reasons that follow, I am satisfied that the case does have generalsignificance, particularly in terms of the correct process of claiming refunds in thesituation of a farm operation involving a sharemilking agreement. It is also the firsttime this Court has considered the meaning of "false in a material particular" underthe LTMA. Leave is granted to the NZTA to appeal on the questions of law.The legal relationship of the farmer and sharemilker[31] It is convenient to address the second question of law first. The principal issueraised by that question is the nature of the legal relationship between Walters Holdingsas the farmer and the sharemilkers for the purposes of claiming a refund of FED.[32] Judge Down found that, for the purposes of determining the entitlement to arefund of FED, the individual sharemilkers were not independent entities, but ratherworked within the farming business of Walters Holdings and in that sense, thesharemilkers and Walters Holdings were not separate entities but were "closelyentwined".11 The Judge rejected the clause in the Variable Order SharemilkingAgreement (the Agreement) between Walters Holdings and the sharemilkers thatstated the relationship was of farm owner and independent contractor.12 In doing so,11 New Zealand Transport Agency v Walters Holdings (2008) Ltd, above n 2, at [47].12 At [46].he said he was influenced by Mr Walters' evidence and the other "documentaryexhibits".13[33] The Judge's reliance on Mr Walters' evidence to determine the relationshipwas misplaced. Mr Walters' evidence about the relationship was confused. Forinstance, Mr Walters accepted for Inland Revenue purposes the sharemilkers wereindependent contractors but said as far as he was concerned they were employees.That is contrary to the express provisions of the Agreement. Also, the categorisationof the legal relationship cannot change and be different for different purposes.[34] The difficulty with the Judge's reliance on Mr Walters' evidence is also shownby the Judge's inability to define the nature of the relationship. Having rejected theclause which provided the sharemilkers were independent contractors, he then said therelationship was not one of employer and employee, nor that of partnership, nor atraditional owner/contractor relationship. It was, in his words, "resistant tocategorisation as any other familiar legal relationship".14[35] The Judge seemed influenced by the submission for Walters Holdings that thesharemilkers worked within the farm business and shared the profits with the farmowner and in that sense, the Walters Holdings and the sharemilkers were not separateentities. But the fact the parties had a contractual arrangement for the sharing ofexpenses and profits does not define their legal relationship. The legal nature of theparties' relationship is a quite different issue to the profit share arrangements.[36] The failure to identify the legal relationship and recognise the parties' status astwo separate and distinct legal entities was an error. To refer to their relationship as"closely entwined" is meaningless at law. The legal relationship between the separateentities of farmer and sharemilker is defined and provided for by the Agreement. TheAgreement confirmed the sharemilker's status as an independent contractor but wenton to provide for an expense and profit-sharing arrangement.13 At [46].14 New Zealand Transport Agency v Walters Holdings (2008) Ltd, above n 2, at [49].[37] While the relationship between a farmer and a sharemilker might have anumber of unique features, particularly in terms of how expenses and profit are to beshared, the relationship is provided for by the Sharemilking Agreements Act 1937.The Agreement used by Walters Holdings and the sharemilkers in this case follows theform of the standard agreement contained in the schedule to the SharemilkingAgreements Act.[38] "Farm owner" is defined in the Agreement as:A farm owner is any person by agreement with whom a sharemilker isentitled to receive a share of the returns or profits derived from the dairy farmoperations.15That recognises that the parties contemplate a share of the return or profits from thedairying operation.[39] "Sharemilker" is defined as:A sharemilker is any person contracted to perform work on a dairy farm(other than an employee) and who is entitled under a Sharemilking Agreementto receive a share of the returns or profits derived from the dairy farmoperation.That definition makes it clear the sharemilkers are not employees (despite Mr Walters'view).[40] Ms Brodnax submitted it was relevant that the Sharemilking Agreements Actdefined a sharemilker in terms of an entitlement to profits. But as noted, the fact theSharemilking Agreements Act and the Agreement provide for the parties to shareexpenses and profits are a feature of the relationship, but do not assist in defining thelegal relationship.[41] The relationship of the parties is expressly defined in cl 16 of the Agreement:The relationship of the parties to this Agreement is that of farm owner andindependent contractor and is not that of employer and employee, nor that ofa partnership.15 That follows the substance of the definition of employer in the interpretation section of the Actand is word for word the same as the definition of farmer in the schedule.[42] I note that the status of the sharemilker as an independent contractor is alsoconsistent with the sharemilker being responsible for providing his or her ownequipment, and employing and providing his or her own employees if necessary.[43] Ms Brodnax submitted, by reference to Reay v Attorney-General and Instituteof Professional Engineers New Zealand Incorporated, that the Court must ascertainthe meaning that a contract would convey to a person having the backgroundknowledge that would reasonably have been available to the parties in the situationthey found themselves at the time of the contract.16[44] But with respect to Ms Brodnax's reliance on Reay, it is nothing more than arestatement of the established and generally accepted principles that, in interpreting acontract, the Court can and should have regard to the context in which it wasnegotiated.[45] Ms Brodnax referred to Mr Walter's views about the relationship as part of thecontext to be taken into account. But Mr Walter's confused view of the nature of therelationship and his subjective views of how the contract was to operate or what itmeant cannot affect the legal rights and responsibilities which are created and clearlydefined by the Agreement.[46] I am satisfied that the relationship of farmer and sharemilker is accuratelydefined by the Agreement and that, in particular, the sharemilkers are independentcontractors for the purpose of determining an entitlement to a refund of FED.[47] Mr Walters accepted that the fuel was used by the sharemilkers. TheAgreement also contains a number of provisions which support the conclusion the fuelwas used by the sharemilkers, rather than Walters Holdings.[48] For example, cls 9 and 10 of the Agreement produced in evidence provides:Machinery, implements, and vehicles9. The Sharemilker agrees to supply the following machinery,implements, and vehicles at the commencement of this Agreement:16 Reay v Attorney-General [2019] NZCA 475 at [35].One of the sharemilkers has inserted:4 wheelers for self and staff,2-wheelerUte(emphasis added)10. If the sharemilker is required to supply machinery, implements, andvehicles, the farm owner and the sharemilker must agree on a setamount to meet the running costs and supply of the machinery,implements, and vehicles. These amount(s) are to be specified inAnnex 1.[49] Clauses 81 and 82 of the standard Agreement provide:Fuel and lubricants81. The owner of the machinery, milking plant, effluent disposal unit, andwater pumps must supply the fuel and lubricants for the machinery,plant unit, and pumps.(emphasis added)Motorbike82. If the sharemilker uses a motorbike on the farm, the sharemilker willprovide it. All costs, including fuel, oil, and running expenses, mustbe paid for by the sharemilker and recorded in Annex 1.[50] Thus, under cl 9, the sharemilker agreed to supply certain machinery and,under cl 81, the sharemilker was responsible for supplying (i.e. paying for) the costsof the fuel for that machinery. Clause 10 of the Agreement contemplates that WaltersHoldings and the sharemilker will agree a set amount for running costs, but that is adifferent issue.[51] Mr Walters' evidence of how and when the costs in general and the fuel inparticular were apportioned in order to calculate the profits to be shared was confused.He may well be correct that because of Walters Holdings' bulk purchase of the fuelthe price charged to the sharemilkers for the fuel was still less than the net cost of fuelafter the FED refund the sharemilkers would have had to pay if they had bought itdirect. But that does not address the issue of entitlement to the FED refund which isdetermined by who used the fuel. The discounted price Walters Holdings paid toWaitomo Petroleum still included the FED. The FED element was included in the costof the fuel charged to the sharemilker. Mr Walters may well consider that WaltersHoldings took account of the fact the sharemilkers had paid for the fuel whencalculating their resultant profit share, but again that does not address which entityused the fuel and was thus entitled to the FED refund.[52] Use of the fuel is the basis for the entitlement to the refund of FED under s 41of the Act and reg 5 of the Regulations. The person who has paid for the fuel, whichincludes the FED, but has used the fuel in exempt vehicles is entitled to claim a refundof the FED paid. As noted, the evidence on this point, including that of Mr Walters,was clear. Walters Holdings charged the sharemilkers the full price for the fuelsupplied to it by Waitomo Petroleum. Mr Walters accepted that the sharemilkers thenused that fuel in their vehicles in the course of carrying out their obligations under theAgreement.[53] To that extent, the sharemilkers were the ones using the fuel in the exemptvehicles (or otherwise for commercial purposes), and were the party entitled to claimthe refund of FED rather than Walters Holdings.[54] Ms Brodnax accepted that the evidence established the fuel was used by thesharemilker in their own vehicles and machinery but submitted the fuel was also usedin some of Walters Holdings' machinery (notably a tractor). That may be so, but againhowever, the sharemilker had paid for the fuel and it was the sharemilker that used thetractor in the course of carrying out their obligations under the Agreement. Ownershipof the tractor was not the issue for the purposes of entitlement to the refund. Use was.[55] By focusing on what he considered to be the prime purpose of the legislation,namely the potential by claiming for a refund of tax when the fuel had been used onroads rather than on private property (which undoubtedly is part of the legislation, butit is not the entire focus), the Judge misdirected himself. It is also fundamental thatthe user, the person who pays for and uses the fuel, is the person who is entitled to therefund.[56] For the above reasons, the answer to the second question is yes, the Judge erredin law in finding that for the purposes of determining entitlement to a refund of FED"a sharemilker does not work as a separate independent entity to the farm owner, butactually works within the farm business, in that sense they are not separate entities butclosely entwined", such as to "make it difficult to determine what entity was using thefuel".[57] That is sufficient to dispose of the appeal to the extent that, by applying for theFED on the basis it used the fuel, rather than the sharemilker, Walters Holdings'applications were, on any view of it, false in a material particular. The Judge waswrong to find that in making the application for refund Walters Holdings was notmaking a false statement by representing that it (rather than the sharemilker) was usingthe fuel in the course of its dairying operation.[58] However, for completeness and to provide assistance for the future applicationof the LTMA in this area, I also address the first question of law.What is "false in a material particular" for the purposes of a refund of FED?[59] On the issue of whether the applications or the information furnished were falsein a material particular, the Court has had the benefit of submissions about the relevantauthorities. Those authorities were not before Judge Down.[60] The meaning of "false in a material particular" has been considered in anumber of cases. It is to be determined in its legislative context. The first issue is themeaning to be given to "false" in this context. As a matter of ordinary English usagethe word "false" has two distinct meanings. The Oxford English dictionary confirmsit can mean either "erroneous" or "purposely untrue".17[61] In R v Gill, the Court of Appeal noted that in the context of tax legislation"false" meant "inaccurate" or "incorrect".18 There was no need to give the word anymens rea element because the mental element was determined by the preceding wordsof the section, namely "wilfully" and "negligently". Similarly, in the present case,there is no need to give the word any mens rea element or import any concept of mensrea as the section provides the application or information must "knowingly" be false.17 The New Shorter Oxford English Dictionary (5th ed, Oxford University Press, Oxford, 2002) vol1 at 919.18 R v Gill (1999) 19 NZTC 15,526 (CA) at [20].[62] In the present context, "false" in s 43 of the LTMA means "erroneous". It willbe sufficient therefore for the NZTA to prove that the application or the informationsubmitted in support of the application is inaccurate or incorrect. The more difficultissue is what is meant by false in a "material particular".[63] Before addressing that, I note that the offence is made out if either theapplication or the information that is furnished to support the application is known tobe false in any material particular. The offence can be made out in one of two ways.The application itself might be false, or alternatively, the information furnished insupport of the application might be false.[64] The application in this case is false in a material particular because WaltersHoldings stated in the application it had used the fuel when the fuel had in fact beenused by the sharemilker. The correct user of the fuel is obviously a material particular.The application by Walters Holdings was false in a material particular, even withoutreference to the further information provided to support the application.[65] There are a number of ways in which the information furnished in support ofthe application could be false. For example, a claim for a refund may be made inrelation to a number of identified exempt vehicles' claims that all the fuel was used inthose vehicles when some of the fuel has been used in a non-exempt vehicle. Or theinformation provided in support of the application may omit one of the exemptvehicles that the fuel was used in. In each case, the information furnished will be falseif the full amount of fuel used is claimed, in the sense that it is erroneous, but the moredifficult issue will be whether it is false in a material particular.[66] That is because the use of the adjective "material" introduces a question ofdegree. The error or inaccuracy must be more than trivial or inconsequential. It mustbe a matter of moment or some significance.[67] NZTA seems to recognise that a degree of latitude must apply to theinformation submitted to support applications for refunds. Ms Napier said that areasonable estimate of the vehicles and the amount of the fuel is required.[68] That is consistent with the NZTA's approach in its publicity material. In itsMR70 Guide in relation to FED NZTA poses the following FAQ:How can I tell what fuel went into what?This is up to you to keep track of. Some examples are:• Attaching a meter to a bulk tank• Using a log book to record fuel usage• Work out how frequently you have used each machine, vessel orvehicle (eg you fill up your 10 litre motorbike about twice a week)and estimate the litres used.[69] On the issue of materiality, in R v Banks, Wylie J held:19[36] The words "any material particular" also drew their meaning from thecontext in which they appeared. The word "material" introduced a question ofdegree. Clearly, the statute implied that not every particular would be material.For example, if a donor's name was simply misspelt, I doubt that any Courtwould find falsity in a material particularSimilarly, in the present context, if the description of a farm bike was in error, thatwould not be false in a material particular.[70] In R v Moses and R v Sullivan, the Court considered the phrase in the contextof false statements made in prospectuses.20 In R v Sullivan, Heath J stated:21[438] The more difficult question is whether a false statement is alsomaterial to the decision of someone to invest on the faith of informationprovided in a prospectus.[439] Questions of materiality or immateriality are opposite sides of thesame coin. In R v Moses, I took the view that a statement will be material ifits disclosure "could well have made a difference to the decision whether toinvest". In expressing the test in that way, I did not intend to dilute the effectof previous authority on this subject. The context in which I articulated theprinciple is important; namely, in relation to the approach likely to be takenby a prudent but non-expert person deciding whether to make an investmentbased on the narrative of an investment statement.[440] Greater precision in the expression of the test is preferable, in thecontext of a prosecution under s 242 of the Crimes Act in which the focus ison the knowledge of the maker of a statement, in light of the market to whom19 R v Banks [2014] NZHC 1244, [2014] 3 NZLR 256.20 R v Moses HC Auckland CRI-2009-004-1388, 8 July 2011; and R v Sullivan [2014] NZHC 2501.21 R v Sullivan, above n 20.the prospectus was directed. In a case such as this, I consider that the approachtaken by the Supreme Court of the United States, most recently in MatrixxInitiatives Inc v Siracusano, should be followed. Delivering the unanimousopinion of the Court, Sotomayor J directed attention to whether a reasonablerecipient of the information would have viewed any false statements "ashaving significantly altered the 'total mix' of information made available" tohim or her. That approach is consistent with the test applied by Cooke J inColeman v Myers, which itself was based on a prior decision of the SupremeCourt of the United States that was followed in Matrixx Initiatives Inc.[71] I agree with Ms Brodnax's submission that the intent of s 242 of the CrimesAct 1961, as applied to prospectuses, is protective, and the comments of Heath J needto be read in that context.[72] What emerges from the above authorities is the need to consider the conceptof materiality in the context of the relevant legislative framework. Looking at thepurpose of the legislation in this case, the error will be material if it might influencethe decision of the NZTA to grant a refund it would not otherwise have granted if thecorrect information had been provided. The purpose of the application and theinformation supplied to support the application is to enable the NZTA to review theapplication and to confirm that the claimed refund of FED is appropriate. That willrequire consideration of, for example:(a) the amount of fuel that has an ineligible use;(b) the number of exempt vehicles;(c) whether the fuel is used in an exempt vehicle, or for other commercialpurposes about the farming operation; and(d) whether the amounts of fuel attributed to the exempt vehicles orcommercial purposes is reasonable.These are critical details to help the NZTA determine whether a claimed rate of fueluse is credible.[73] The test must be, would the inaccuracy or error in the form, if corrected, haveled to a different outcome? Would it lead, for instance, to the refund being declinedin whole or in part?[74] Ms Brodnax emphasised that the forms are not provided by regulation. Thatis correct, but they have been provided under delegation from the Secretary and theinformation they require is authorised under s 42 of the LTMA. That section providesthat every application for refund must be made on a form to be provided by theSecretary and supported by documentary evidence that the Secretary may require.[75] The forms approved by the Secretary provide for the following informationregarding unregistered vehicles: make/model; engine number; year of manufactureand litres used. Both Walters Holdings and the sharemilkers were able to provideschedules of such information without apparent difficulty, albeit that Walters Holdingsinformation was incorrect.[76] Mr Walters' evidence, repeated in counsel's submission, that Walters Holdingsexpected the NZTA to raise issues with them is quite the wrong approach. Theobligation is on the person making the application for a refund of FED to ensure thatthe application and the supporting information is correct. The failing in WaltersHoldings approach is reflected in the following exchange with Mr Walters:Q. So, what steps did you take to ensure that the [applications] beingsubmitted, on behalf of your company, contained correct information?A. In terms of the vehicles, none. In terms of the application, I guess werelied on Transit New Zealand to approve or, they didn't approve orhave questions, we would give them the information or supply thecorrect information. I don't think that's been asked for.[77] Where, as here, the evidence was that the application for refunds were entirelyincorrect, the requirement is readily satisfied, no matter what test is applied tomateriality. Further, as Mr Flanagan, counsel for the NZTA, noted, this is not a caseof the forms being incomplete or missing some details. The forms in this case includedpositive misstatements.[78] In terms of the details of the list of exempt vehicles supplied by WaltersHoldings, there was the following frank concession by Mr Walters:Q. So, you'd accept that that list is just wrong, insofar as it relates to thefive farms?A. Absolutely.[79] Further, when questioned about how the administrator would have known howmuch fuel to allocate to particular vehicles, the answer was:A. She would've probably guessed that, I suspect. Rather than by fact.[80] In the circumstances of this case it was not enough, as Ms Brodnax submitted,that overall the amount of fuel may have been correct, and the fuel was used for thedairying operations rather than on the road. Quite apart from the fact Walters Holdingswas not entitled to make the application as it was not the user of the fuel, theapplications were false in a number of the material particulars furnished to support theapplication. The correct exempt vehicles were not identified, and the fuel allocated totheir use was not even a realistic estimate.Result[81] Leave to appeal is granted.[82] The questions of law are answered:(a) Yes, the Judge erred in law when he declined to find that theapplications were false in a material particular in relation to a list ofvehicles and assets in which Walters Holdings claimed to have used thefuel it was claiming a refund of despite finding that this informationwas "plainly inaccurate"?(b) Yes, the Judge erred in law in finding that for the purposes ofdetermining entitlement to a refund of FED "a sharemilker does notwork as a separate independent entity to the farm owner, but actuallyworks within the farm business; in that sense they are not separateentities but closely entwined", such as to "make it difficult to determinewhat entity was using the fuel"?[83] The appeal is allowed. The acquittals entered in the District Court are set aside.However, as the law has been clarified as sought by NZTA and in light of the Judge'sfindings concerning Mr Walters' belief as to Walters Holdings' entitlement to therefund, justice does not require the matter to be reheard in the District Court. I declineto direct a rehearing.__________________________Venning J