BUBLITZ v SOLICITOR-GENERAL (THE CROWN) [2020] NZHC 2476

BUBLITZ v SOLICITOR-GENERAL (THE CROWN) [2020] NZHC 2476 [22 September 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECRI-2014-004-002293[2020] NZHC 2476BETWEEN PAUL NEVILLE BUBLITZApplicantAND SOLICITOR-GENERAL (THE CROWN)RespondentHearing: 2 September 2020Appearances: D Johnstone for the CrownR Reed QC and Y Wang for the RespondentJudgment: 22 September 2020JUDGMENT OF WOOLFORD J[As to costs]This judgment was delivered by me on Tuesday, 22 September 2020 at 3:00 pm.Registrar/Deputy RegistrarSolicitors: Beca & Co (R Beca), Auckland for the ApplicantMeredith Connell (Office of the Crown Solicitor), AucklandCounsel: R Reed QC, Auckland[1] Mr Paul Bublitz applies for costs under the Costs in Criminal Cases Act 1967(CCCA) in respect of charges he faced during an aborted first trial, which were eitherdismissed during the first trial or on which he was acquitted following a second trial.He says the charges were inappropriately brought and pursued by the Crown becausethey lacked underlying merit. He also says the nature and number of the dismissedand acquitted charges was disproportionate to the actual scope of criminality, whichimposed an unfair cost burden on the defence.[2] Mr Bublitz's application for costs is opposed by the Crown. It has filed its ownapplication under the CCCA seeking costs in the same amount against Mr Bublitz.Earlier costs judgment[3] Mr Bublitz applied for costs following the aborted first trial, but before thesecond trial. I awarded Mr Bublitz $10,000 in respect of a disclosure failure unders 364 of the Criminal Procedure Act 2011 (CPA), but refused costs under the CCCAas I considered that the appropriate time to hear Mr Bublitz's CCCA application wasafter all charges against him had been heard and determined.1 The Court of Appealsubsequently dismissed an appeal from my decision.2 The Supreme Court then refusedleave to appeal.3Charges of which Mr Bublitz was convicted[4] The second Judge-alone trial concluded on 5 February 2019 with verdicts ofguilty against Mr Bublitz on six charges. He was acquitted on six charges.4 Of thesix charges on which he was convicted, four were theft by a person in a specialrelationship. Mr Bublitz had control over investor funds in Mutual Finance Ltd(Mutual) and knew that he could only deal with the funds in accordance with therequirements of the Crown under a replacement Crown guarantee. Nonetheless, heintentionally dealt with the funds otherwise than in accordance with the Crown'srequirements when he arranged for the purchase by Mutual of a number of loans fromViaduct Capital Ltd (Viaduct) or arranged for loan advances to be made from Mutual1 R v Bublitz [2018] NZHC 373 [Earlier costs judgment (HC)].2 Bublitz v R [2019] NZCA 379 [Appeal against earlier costs judgment (CA)].3 Bublitz v R [2019] NZSC 139 [Leave to appeal against earlier costs judgment (SC)].4 R v Bublitz [2019] NZHC 222 [Verdicts judgment (HC)].to a related party. The thefts occurred over a four-month period and involved a totalof approximately $1.17 million. Of this total, $310,000 has been repaid by theborrowers, leaving a loss to the Crown of approximately $860,000.[5] The other two charges of which Mr Bublitz was convicted were making orconcurring in making a false statement in Mutual's initial 3 March 2010 prospectusand as subsequently amended by memorandum dated 28 April 2010. The Crownalleged that the prospectus failed to disclose breaches of the initial and replacementCrown guarantees, and the consequent risk of the guarantee being withdrawn at shortnotice.[6] On appeal, the Court of Appeal upheld the four charges of theft by a person ina special relationship, but acquitted Mr Bublitz of the two prospectus charges on thebasis that investors' funds remained secured by the Crown guarantee regardless ofwhether Mutual was in breach of it during the currency of the prospectus.5Sentencing[7] The trial Judge, Toogood J, adopted a starting point for Mr Bublitz on the theftcharges of four years and six months' imprisonment.6 He uplifted that by nine monthsfor the prospectus charges, making an overall starting point of five years and threemonths' imprisonment.[8] The Judge then reduced the final starting point by 30 per cent because he wassatisfied that there had been a significant punitive element in the way in which thecriminal prosecution had been undertaken, without ascribing blame or responsibilityto anyone.7[9] The Judge then applied a further discount of 10 per cent to recogniseMr Bublitz's previous good character, some remorse and his cooperation. Theconsequences of those discounts for Mr Bublitz was that from a starting point of five5 Bublitz v R [2019] NZCA 364, [2019] 3 NZLR 533 [Appeal against conviction and sentence (CA)].6 R v Bublitz [2019] NZHC 592 [Sentencing judgment (HC)].7 At [93].years and three months' imprisonment, the application of a total discount of 40 percent reduced his sentence to three years and two months' imprisonment.[10] On appeal, the Court of Appeal considered that the appropriate starting pointfor Mr Bublitz should have been no more than four years' imprisonment on the basisthat the Judge incorrectly took account of Mr Bublitz's conduct in 2009 which was notfound to be unlawful and he overstated the losses.8 The Court of Appeal, therefore,considered the starting point should be reduced by six months to account for this.Having acquitted Mr Bublitz on the prospectus charges, the uplift of nine months forthis offending could also not now be applied.[11] Finally, the Court of Appeal considered that the discount allowed by thesentencing Judge for delay, effectively 19 months, was appropriate. However, theCourt disagreed that it should be calculated as a percentage.[12] In allowing Mr Bublitz's appeal against sentence, the Court of Appeal thereforeadopted a starting point on the theft charges of four years' imprisonment, from which19 months were deducted for delay and a further five months (10 per cent) for personalmitigating factors the Judge took into account. This yielded an end sentence of24 months' imprisonment, making home detention an option. The Court of Appealconsidered such a sentence would be the least restrictive outcome. Taking into accountthe time served, the Court considered it appropriate to substitute a sentence of11 months' home detention for the sentence of three years and two months'imprisonment imposed at first instance.Claim by Mr Bublitz[13] Mr Bublitz seeks an award of 75 per cent of the costs incurred by him towardshis defence, which, he says, are attributable to the 36 charges which were dismissedunder s 147 of the CPA during trial or the eight charges (six by Toogood J and two bythe Court of Appeal) on which he was acquitted following the final outcome of thesecond trial.8 Appeal against conviction and sentence (CA), above n 5, at [159].[14] Mr Bublitz personally incurred costs of $1,527,283.49 towards his defence inthe first trial before exhausting his resources and continuing on legal aid. He seeks75 per cent of these costs, being $1,145,462.50, on the basis that those costs representthe approximate portion of costs spent by his defence team in the defence of thedismissed and acquitted charges.The law[15] Section 5 of the CCCA provides:5 Costs of successful defendant(1) Where any defendant is acquitted of an offence or where the charge isdismissed or withdrawn, whether upon the merits or otherwise, thecourt may, subject to any regulations made under this Act, order thathe be paid such sum as it thinks just and reasonable towards the costsof his defence.(2) Without limiting or affecting the court's discretion under subsection(1), it is hereby declared that the court, in deciding whether to grantcosts and the amount of any costs granted, shall have regard to allrelevant circumstances and in particular (where appropriate) to—(a) whether the prosecution acted in good faith in bringing andcontinuing the proceedings:(b) whether at the commencement of the proceedings theprosecution had sufficient evidence to support the convictionof the defendant in the absence of contrary evidence:(c) whether the prosecution took proper steps to investigate anymatter coming into its hands which suggested that thedefendant might not be guilty:(d) whether generally the investigation into the offence wasconducted in a reasonable and proper manner:(e) whether the evidence as a whole would support a finding ofguilt but the charge was dismissed on a technical point:(f) whether the charge was dismissed because the defendantestablished (either by the evidence of witnesses called by himor by the cross-examination of witnesses for the prosecutionor otherwise) that he was not guilty:(g) whether the behaviour of the defendant in relation to the actsor omissions on which the charge was based and to theinvestigation and proceedings was such that a sum should bepaid towards the costs of his defence.(3) There shall be no presumption for or against the granting of costs inany case.(4) No defendant shall be granted costs under this section by reason onlyof the fact that he has been acquitted or that any charge has beendismissed or withdrawn.(5) No defendant shall be refused costs under this section by reason onlyof the fact that the proceedings were properly brought and continued.[16] One of the events listed in s 5(1) must occur for the court to have jurisdictionto make an order under s 5. The defendant must either be acquitted or the charge mustbe dismissed or withdrawn.[17] The court has a broad discretion once s 5(1) is satisfied.9 Section 5(2) states,without limiting or affecting that discretion, the court "shall have regard to" allrelevant circumstances in deciding whether to grant costs and the amount of any costsgranted. That subsection includes a non-exhaustive list of circumstances the courtshould have regard to, where appropriate.[18] Hardie Boys J addressed s 5 in R v Margaritis:10The various criteria in s 5 really come down to two questions: was theprosecution reasonably and properly brought and pursued; did the accusedbring the charge on his own head.[19] In R v Connolly, Fogarty J quoted Hardie Boys J and said: 11[7] As the argument developed in this hearing the truth of Hardie Boys J'spropositions in Margaritis came home. Nonetheless, I do not read any of theseauthorities to displace the plain words of s 5(2), which impose a duty on theCourt to have regard to the considerations set out in those paragraphs whereappropriate. The case law emphasises that it is important for the Court not tolose sight of the fact that it is subs (1) of s 5 which gives the Court the powerto make an order and provides that this power is discretionary. Before theCourt can make the order the Court must be satisfied that any order be justand reasonable. The criteria in subs (2) follow a logical sequence. Broadlythey proceed chronologically. They are intended to provide a structure ofanalysis to be adapted by the Court to the particular circumstances of theparticular case.[20] Fogarty J's judgment was overturned by the Court of Appeal but later restoredby the Supreme Court. The Supreme Court said:129 See Solicitor-General v Moore [2000] 1 NZLR 533 (CA) at [30]; and Delamere v Serious FraudOffice [2009] NZCA 142, [2009] 3 NZLR 94 at [27].10 R v Margaritis HC Christchurch T66/88, 14 July 1989 at 8.11 R v Connolly (2006) 22 NZTC 19,844 (HC).12 R v Reid [2007] NZSC 90, [2008] 1 NZLR 575.[21] In any event, Fogarty J applied the stipulated statutory criteria.What weight he may have given to any particular factor does not engagematters of principle affecting the validity of his statutory discretion.[23] But, in any event, an appellate court cannot hope to capture theephemeral but significant impressions which inform the assessments anddiscretions of the trial judge. That is why, of course, a challenge to the exerciseof discretion must demonstrate what would be termed, generally, an error ofprinciple.[21] Section 5(3) makes it clear that there shall be no presumption for or againstawarding costs in any case. Section 5(4) provides a defendant shall not be grantedcosts only because they have been acquitted or the charge against them has beendismissed or withdrawn. As Heath J said in McLeod v R:13[10] ... Accordingly, while "success" in the proceeding is a jurisdictionalpre-requisite to an application, the fact of "success" is neutral when thediscretion whether or not to award costs (and, if so, in what amount) isexercised.[22] Section 5(5) provides that no defendant shall be refused costs only because thecriminal proceedings were properly brought and continued.Discussion[23] I agree with counsel for Mr Bublitz that many of the circumstances of this casedo not fit neatly under any of the s 5(2) factors. In this context, the courts' repeatedemphasis on the wide discretion under s 5 is apt. I therefore do not intend to go througheach of the s 5(2) factors in turn. Nor do I intend to closely analyse the various chargeswhich were dismissed or upon which Mr Bublitz was acquitted. That is because I seethe situation in rather simple terms.[24] Notwithstanding the detailed and comprehensive submissions made by counselfor Mr Bublitz, I conclude that Mr Bublitz's application for costs under the CCCAshould be dismissed for three major reasons. First, a costs award would "situncomfortably with [the] verdicts of guilty,"14 namely, the four theft convictionsentered against Mr Bublitz. The offences of which he has been convicted are not minor13 McLeod v R [2016] NZHC 221.14 Smith v R [2013] NZCA 300 at [9].or technical. They formed a substantial part of the Crown case. (Mr Bublitz can betaken to estimate 25 per cent, as he claims only 75 per cent of his costs). In none ofthe cases cited by counsel for Mr Bublitz was a defendant awarded costs under theCCCA, having been discharged or acquitted of only some of the charges they faced attrial (and convicted of others).[25] Secondly, no reparation was ordered or contemplated at sentencing because ofMr Bublitz's impecuniosity. The funds stolen by Mr Bublitz totalled $1.17 million.He now seeks almost exactly the same amount, $1,145,462.50, for his costs, yet doesnot offer any reparation. In effect, he asks the Crown to pay twice — once for thepayout made in terms of the Crown guarantee to investors in Mutual, who were out ofpocket in respect of charges of which Mr Bublitz was convicted, and a second time topay his own costs in respect of charges which were dismissed or on which he wasacquitted.[26] Thirdly, Mr Bublitz's costs have already been indirectly taken into account inthe 19-month discount on sentence he was granted by the Judge. Counsel forMr Bublitz argued that the discount was purely for delay, but I am of the view that itencompassed more.[27] The Judge stated on sentencing:15[90] You have each suffered serious financial harm as a result of thecost of defending yourselves, to the extent that that was not supported by thelegal aid scheme. In your case, Mr Bublitz, I understand the loss to besomething of the order of $1 million. You each recovered only a very smallamount of your actual cost in the award of costs by Woolford J.[93] I am satisfied that there has been a significant punitive element in theway in which this criminal prosecution has been undertaken, without ascribingblame or responsibility to anyone. I regard that as being appropriatelyrecognised as a mitigating factor on sentence by reducing the appropriatesentences by 30 per cent from the starting points I have identified.[28] The punitive element to which the Judge referred includes the "seriousfinancial harm" to which he had earlier referred.15 Sentencing judgment (HC), above n 6.[29] Similarly, the Court of Appeal referred to the financial burden for Mr Bublitzwhen it upheld the discount of 19 months for delay. The Court of Appeal stated:16[37] It is not disputed that the extraordinary delays have had profoundconsequences for the appellants and their families, affecting their health,reputations and financial position. The Judge allowed a discount of 30 percent for this at sentencing.[164] The consequences of the delay for Mr Bublitz are the same in eachof these examples. He spent nine months of his life and over $1 million of hisown money in a High Court trial that had to be aborted due entirely to failingsfor which the Crown must take sole responsibility. He has sufferedconsiderably in consequence of this. The remedy is for the breach ofMr Bublitz's right to be tried without undue delay and this has no necessarycorrelation to the starting point adopted at sentencing to reflect his culpabilityfor the offending.(emphasis added)[30] The Supreme Court also commented,17 in dismissing Mr Bublitz's applicationfor leave to appeal against the Court of Appeal decision18 dismissing his appeal frommy earlier costs judgment:Further, as the respondent submits, Mr Bublitz has had the benefit of asentence reduction because of the delays and wasted costs due, albeit in part,to the failures of disclosure and the aborted initial trial.[31] In conclusion, if Mr Bublitz had been acquitted on all charges, he would havehad a strong case for a substantial award of costs for all the reasons advanced by hiscounsel, but the Crown has suffered a substantial unrecovered loss caused byMr Bublitz's thefts. His application for costs under the CCA is dismissed. Likewise,the Crown's application for costs under the CCCA is dismissed, as it was contingenton a successful application by Mr Bublitz.________________________________Woolford J16 Appeal against conviction and sentence (CA), above n 5.17 Leave to appeal against earlier costs judgment (SC), above n 3 at [17].18 Appeal against earlier costs judgment (CA), above n 2.