BUBLITZ v R [2019] NZCA 364

BUBLITZ v R [2019] NZCA 364 [16 August 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA186/2019[2019] NZCA 364BETWEEN PAUL NEVILLE BUBLITZAppellantAND THE QUEENRespondentCA149/2019BETWEEN BRUCE ALEXANDER MCKAYAppellantAND THE QUEENRespondentCA187/2019BETWEEN RICHARD TIMOTHY BLACKWOODAppellantAND THE QUEENRespondentHearing: 4 July 2019Court: Gilbert, Wylie and Thomas JJCounsel: R S Reed QC for BublitzG N E Bradford and S D Withers for McKayM A Corlett QC and H M Z Ford for BlackwoodD G Johnstone and S A Rankin for RespondentJudgment: 16 August 2019 at 9 amJUDGMENT OF THE COURTA Mr Bublitz's appeal against conviction is allowed in part. The convictions oncharges 14 and 15 are set aside. We direct that a judgment of acquittal beentered on those charges. Mr Bublitz's appeal against conviction oncharges 10–13 is dismissed.B Mr Bublitz's appeal against sentence is allowed. His sentence of three yearsand two months' imprisonment is set aside and a sentence of 11 months'home detention is substituted on each of charges 10–13 to be servedconcurrently. This sentence is to commence immediately upon release.Following his release, Mr Bublitz is to travel directly to the address stated inthe memorandum dated 9 July 2019 from the Department of Corrections andawait the arrival of a security officer. Mr Bubltiz is to comply with the specialconditions set out in that memorandum.C Mr McKay's appeal against conviction is dismissed.D Mr Blackwood's appeal against conviction is allowed. The convictions oncharges 10–13 are set aside. We direct that a judgment of acquittal be enteredon those charges.___________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)Table of ContentsIntroduction [1]Background [11]Hunter group [13]Viaduct Capital Ltd [14]Mutual Finance Ltd [17]The chargesCharges 10–12 [19]Charge 13 [21]Charges 14 and 15 [22]Grounds of conviction appeals [23]Should the prosecution have been stayed?Background [24]Submissions [38]Analysis [42]Was the definition of "control" in the Mutual Crownguarantee sufficiently specific to found a "requirement"for the purposes of s 220 of the Crimes Act? [45]Definition of "control" [47]High Court judgment [49]Submissions [51]Analysis [55]Did the Crown need to prove the transactions were notconducted on arm's length terms? [58]Did the Judge make the requisite finding that Mr Bublitzentered into the transactions knowing they were in breachof the related party restrictions in the Mutual Crown guarantee? [60]Did the Judge give adequate reasons for finding that Mr Blackwoodand Mr McKay acted with the necessary intent?The Judge's reasons [65]Submissions [71]Analysis [75]Was the evidence sufficient to prove the appellants actedwith the necessary knowledge and intent?Crown submissions [78]Mr Bublitz controlled Viaduct [79]Mr Bublitz controlled Mutual [82]Involvement in purchase of Mutual [84]Letter to the Treasury dated 9 November 2009 [86]Viaduct credit submissions prepared in August 2009 [89]Finance company with Crown guarantee targeted [90]Credit submission for Homebush loan 5 February 2010 [91]Ms Groom's concern about inter-company transactions [92]Email from Mr McKay on 29 March 2010 [93]Meeting with KiwiBank on 1 April 2010 [95]Credit submissions relating to Hilltop [96]Mr Bublitz [102]Mr McKay [117]Mr Blackwood [122]Were the statements about the Crown guarantee in Mutual'sprospectuses materially false? [127]Did the Judge make the required finding of intent? [131]Were Mr McKay's fair trial rights breached? [136]Conclusion on conviction appeals [144]Mr Bublitz's sentence appealSentencing judgment [145]Was the starting point for charges 10–13 too high? [150]Uplift for other offending [163]Discount for delay [164]Conclusion on sentence appeal [166]Result [167]Introduction[1] Following a Judge-alone trial in the High Court at Auckland before Toogood J,Mr Bublitz was convicted of four charges of theft by a person in a special relationship,an offence under s 220 of the Crimes Act 1961 (charges 10–13).1 These chargesalleged Mr Bublitz knowingly misapplied funds raised from the public byMutual Finance Ltd (Mutual), a company Mr Bublitz controlled, in breachof the restrictions on related party transactions contained in a deed of guarantee dated8 December 2009 between Mutual and the Crown (Mutual Crown guarantee).2[2] Charges 10–12 concerned the purchase by Mutual from a company associatedwith Mr Bublitz, Viaduct Capital Ltd (Viaduct), of loans Viaduct had made tocompanies in the Hunter group through which Mr Bublitz undertook various propertydevelopment projects. The Judge was satisfied these loan purchases were related partytransactions because he found Mr Bublitz controlled both Mutual and Viaduct forthe purposes of the Mutual Crown guarantee at the relevant times.3 The Judge foundthat the restrictions on related party transactions in the Mutual Crown guarantee wereknowingly breached in respect of these transactions.4[3] Charge 13 arose out of advances made by Mutual to Hilltop Ridge Farms Ltd(Hilltop), one of the Hunter group companies. The Judge was satisfied Mr Bublitzcontrolled both Mutual and Hilltop at the time these advances were made and thesealso breached the related party restrictions in the Mutual Crown guarantee.5[4] Messrs McKay and Blackwood were convicted as parties to these offences(save that Mr McKay did not face charge 13).[5] Mr Bublitz was also convicted of two charges of making a false statement asa promoter in a prospectus, an offence under s 242 of the Crimes Act (charges 141 R v Bublitz [2019] NZHC 222 [Verdicts judgment].2 The Crown Retail Deposit Guarantee Scheme was established in October 2008 under the PublicFinance Act 1989 to shore up the New Zealand banking system and give assurance to New Zealanddepositors. Under the Scheme, the Crown guaranteed to repay depositors if the financialinstitutions in which they invested subsequently failed.3 Verdicts judgment, above n 1, at [229]–[265].4 At [281]–[291].5 At [269]–[271].and 15). Mutual's prospectuses issued in March and April 2010 referred to the benefitof the Crown guarantee but did not disclose the risk it could be withdrawn at shortnotice because of the alleged breaches founding charges 10–13.[6] Mr Bublitz was acquitted on six other charges alleging related partytransactions between Viaduct and companies controlled by Mr Bublitz whichtransactions were alleged to be contrary to the terms of Viaduct's Debt Security TrustDeed (Viaduct Trust Deed) (charges 1–3 and 5–7). The Judge was not satisfied thesewere related party transactions because the Crown had not proved that Mr Bublitz"controlled" Viaduct in terms of the Viaduct Trust Deed.6 It followed from thisconclusion that Mr McKay and Mr Blackwood had to be acquitted on the other chargesthey faced. These were: charge 4 (Mr McKay), which alleged statements in Viaduct'sprospectus were false because of the related party lending giving rise to charges 1–3;charge 8 (Mr McKay and Mr Blackwood), which alleged statements in Viaduct's laterprospectus were also false because of related party lending giving rise to charges 1–3and 5–7; and charge 9 (Mr McKay and Mr Blackwood), which alleged false statementsin the directors' quarterly report to the trustee by reason of the alleged related partytransactions founding charges 1–3 and 5–7.7[7] As we discuss in more detail later, this was the second trial for this matter.An earlier trial, which commenced on 8 August 2016, was aborted on 10 May 2017after nine months of hearing. At the commencement of the first trial, the Crown chargenotice listed 49 charges. These included 11 charges alleging breaches of the relatedparty lending restrictions in a separate trust deed dated 14 August 2002 Mutual had inplace to protect its investors (Mutual Trust Deed), including the transactionssupporting charges 10–13. Having considered the expert evidence proposed to becalled by the defence, the Crown elected not to offer evidence on these charges andthey were dismissed on 21 September 2016.8[8] As will be apparent, the essence of the Crown case from the outset was thatthe appellants engaged in related party transactions on behalf of Viaduct and Mutual6 At [178]–[218] and [220].7 At [218].8 R v Bublitz [2016] NZHC 2863 [First stay judgment] at [4]; and R v Bublitz [2017] NZHC 2251[Third stay judgment] at [16].knowing this was in breach of their obligations pursuant to the Viaduct Trust Deed,the Mutual Trust Deed or the Mutual Crown guarantee (as applicable). The appellantswere never charged with breaching the Viaduct Crown guarantee. The appellants wereacquitted on the charges based on a breach of the restrictions on related partytransactions in the Viaduct Trust Deed. The charges alleging breach of the restrictionson related party transactions in the Mutual Trust Deed were dismissed. However, theappellants were convicted on the charges arising out of the same transactions butalleging a breach of the restrictions on related party transactions in the Mutual Crownguarantee. Even then, the Crown succeeded on only one of the two definitions of"control" relied on under the Mutual Crown guarantee.[9] In summary:(a) the Judge was satisfied Mr Bublitz controlled Viaduct in terms of oneof the definitions in the Mutual Crown guarantee at the time ofthe transactions giving rise to charges 10–12;(b) the Judge was not satisfied Mr Bublitz controlled Viaduct in terms ofthe alternative definition in the Mutual Crown guarantee relied on bythe Crown for those same charges;(c) the Crown elected not to offer evidence that Mr Bublitz controlledViaduct in terms of the Mutual Trust Deed at the time of those sametransactions and those charges were dismissed;(d) the Judge was not satisfied Mr Bublitz controlled Viaduct in terms ofthe Viaduct Trust Deed at any relevant time; and(e) Mr Bublitz was not charged that he controlled Viaduct in terms ofthe Viaduct Crown guarantee.[10] These outcomes are explicable only on the basis that the definition of "control"in the Mutual Crown guarantee was wider than the comparable provisions inthe Viaduct Trust Deed and the Mutual Trust Deed. Whether the appellantsunderstood the breadth of the restrictions on related party lending in the MutualCrown guarantee arising out of the extended definition of "control", and whether theyparticipated in the transactions knowing they breached those restrictions, are issueslying at the heart of these appeals against their convictions. Mr Bublitz also appealsagainst his sentence of three years and two months' imprisonment contending this wasmanifestly excessive in all the circumstances.9Background[11] We briefly set out the background to the alleged offending before addressingthe specific grounds of appeal.[12] The 2008 global financial crisis (GFC) had a major impact on commercialproperty developments in New Zealand leading to illiquidity, distressed loans anddepressed asset values. Nicolaas Wevers, who had over 30 years' experience incommercial property management and investment, identified an opportunity to takeadvantage of these market conditions by establishing a well-capitalised specialistfinance company to acquire distressed property loans at greatly discounted prices,funding the completion of the developments and making significant profits. In late2008 Mr Wevers invited Mr Bublitz to join him in the venture and help fund it.Hunter group[13] Mr Bublitz had built a sizable property development business through variouscompanies known as the Hunter group (Hunter). Hunter had significant assets but,like many other such companies at this time, cashflow was becoming a seriousconcern. Mr Bublitz was attracted to the possibility of acquiring a finance companythat had the benefit of a Crown guarantee as a source of funding for Hunter and to takeadvantage of the other investment opportunities Mr Wevers had identified. Mr Bublitzand Mr Wevers recognised that any such finance company would be subject torestrictions on related party lending both under its debt security trust deed and anyCrown guarantee and the implications of this would need to be managed carefully.They asked Mr McKay, who had been engaged under contract to Hunter in a senior9 R v Bublitz [2019] NZHC 592 [Sentencing judgment].finance role since August 2005, to consider and report on the various tests fordetermining whether parties were "related" and the implications of this in structuringthe proposed purchase. They also obtained professional advice from reputableaccountants and lawyers on how this problem could be managed.Viaduct Capital Ltd[14] Priority Finance Ltd (Priority) was subsequently acquired by a companyformed for that purpose, Phoenix Finance Holdings Ltd (Phoenix). It was originallyintended that Mr Bublitz would hold 600 of the 900 shares in Phoenix with Mr Weversholding the balance. However, due to a change in the accountant's advice two daysbefore settlement that this shareholding would create related party problems,the transaction was restructured so that Mr Wevers acquired all the shares in Phoenixgiving him control of Priority. Hunter funded the purchase through a loan agreementwith Phoenix secured by a general security agreement over Phoenix's assets whichcomprised its shares in Priority. Following settlement of the purchase inFebruary 2009, Priority changed its name to Viaduct Capital Ltd and Mr Wevers andMr McKay were appointed its directors. Mr McKay became Viaduct's chief financialofficer.[15] Cash available to Viaduct was used to purchase various assets from Hunter andmake cash advances to it thereby alleviating Hunter's cashflow difficulties.However, following an investigation and report by PricewaterhouseCoopers (PwC),the Treasury withdrew Viaduct's Crown guarantee in April 2009. This was becauseTreasury considered the guarantee was being used to provide benefits to personsoutside the intended scope of the scheme. It was not suggested at that time that Viaductand the Hunter entities with which it transacted were related parties. PwC appearedto accept they were not.[16] Without the Crown guarantee, Viaduct had difficulty raising further funds fromthe public and its cash position deteriorated to the point where Mr Wevers advisedMr Bublitz in September 2009 that he would not allow Viaduct to provide furtherfunding to Hunter and he could not sign a prospectus seeking further funds fromthe public. Mr Wevers urged Mr Bublitz to take "drastic actions immediately"including selling his house and other assets to address funding issues. Mr Wevers'concerns were not resolved to his satisfaction and he resigned as a director of Viaductlater that month. He transferred 51 per cent of his shareholding in Phoenix toMr McKay but retained the balance of the shares. Mr Blackwood, who had beenengaged on contract as a loan originator for Viaduct in early March 2009, replacedMr Wevers as a director.Mutual Finance Ltd[17] In December 2009 Argus Capital Ltd, a Hunter group company, purchasedMutual. Mutual was another finance company with the benefit of a Crown guarantee.It is not disputed that Mr Bublitz controlled Mutual for the purposes of the relatedparty transaction restrictions in the Mutual Crown guarantee; Mr Bublitz was Mutual'smanaging director and the ultimate owner of its shares.10[18] Following acquisition, Mutual entered into the transactions giving rise tocharges 10–13.The chargesCharges 10–12[19] Charges 10–12 are in materially the same terms and all allege related partytransactions between Mutual and Viaduct in breach of the terms of the Mutual Crownguarantee. It will therefore suffice to set out the wording of charge 10 by way ofexample:[The appellants], between 25 January 2010 and 11 February 2010,at Auckland or elsewhere in New Zealand, together with PETER LOUISCHEVIN,[11] had control over property, namely investor funds in Mutual, onterms or in circumstances that they knew required them to deal withthe property in accordance with the requirements of the Crown underthe replacement Crown Guarantee dated 8 December 2009 (replacementCrown Guarantee), and intentionally dealt with the property otherwise thanin accordance with those requirements.10 Verdicts judgment, above n 1, at [31].11 Mr Chevin was a close business associate of Mr Bublitz who managed various projects for him.ParticularsThe purchase (in two tranches) by Mutual from Viaduct of the Homebushloan without the prior written consent of the Crown, such purchase involvinga transaction (or series of linked or related transactions):- having a value exceeding one percent of Mutual's Total Tangible Assets;- to which a Related Party of Mutual (other than a wholly-owned subsidiaryof Mutual) was a party (in that in terms of 1.2(f)(i) or (ii) ofthe replacement Crown Guarantee Mr Bublitz controlled both Viaduct andMutual, each company being a subsidiary of his for the purposes ofGAAP[12] and/or Mr Bublitz being able to exercise real or effectivecontrol, directly or indirectly, over each company or over a material partof each company's business or affairs); and- not first certified to the Crown in writing, by an independent expertapproved by the Crown in writing, that the transaction was, in the opinionof the expert, on arms' length terms.[Refer cl 6.2(b) of the replacement Crown Guarantee](Footnotes added).[20] By way of explanation, the Homebush loan referred to in charge 10 was a loanby Viaduct to Homebush Trustees Ltd (Homebush), a Hunter group company whichwas undertaking a property development in Khandallah, Wellington.13 Charge 11concerned the purchase by Mutual from Viaduct of a loan associated witha commercial property development known as Northgate at Silverdale, north ofAuckland also being undertaken by the Hunter group.14 Charge 12 related tothe purchase by Mutual from Viaduct of a loan it had made to Hilltop, which wasa Hunter group company formed for the purpose of carrying out the conversion of anunderperforming dairy farm at Kinloch, Lake Taupō into a goat farm.15Charge 13[21] Charge 13 is in the same terms as charges 10–12, the only material differencebeing that the transactions comprised loan advances by Mutual to Hilltop rather thanthe purchase from Viaduct of existing loans to Hilltop and other Hunter group parties.12 GAAP is an acronym for Generally Accepted Accounting Practice.13 Verdicts judgment, above n 1, at [101].14 At [103].15 At [104].The alleged related parties were Mutual and Hilltop, not Mutual and Viaduct as withthe other charges.Charges 14 and 15[22] Charges 14 and 15 are also in materially the same terms. Charge 14 relevantlyreads:[Mr Bublitz] between 2 March 2010 and 28 April 2010, at Auckland orelsewhere in New Zealand, in respect of Mutual, made or concurred inthe making or publishing of a false statement, with intent to induce any personto subscribe to any security within the meaning of the Securities Act 1978.ParticularsMutual's 3 March 2010 prospectus, which amounted to a false statementbecause:A. The prospectus drew particular attention to Mutual having enteredthe initial Crown Guarantee and the replacement Crown GuaranteeB. The prospectus referred to a wide range of risks pertaining to Mutual,including the risk of the Crown Guarantee scheme expiring on 12 October2010 without being extended or replaced.C. The prospectus failed to disclose:- any of the breaches of the initial Crown Guarantee and the replacementCrown Guarantee the subject of Charges 10 to 13; and/or- the consequent risks of the replacement Crown Guarantee beingwithdrawn at short notice, and of Mutual's business operations beingdisadvantageously affected.Grounds of conviction appeals[23] There is considerable overlap between the grounds raised by the appellants inin support of their conviction appeals on charges 10–13. It is therefore convenientto list the grounds covering all charges and address them separately to the extent theyapply to each appellant:(a) Mr Bublitz's right to be tried without undue delay assured under s 25of the New Zealand Bill of Rights Act 1990 (BORA) was breachedto such an extent that the prosecution ought to have been stayed.(b) The restriction in the Mutual Crown guarantee was insufficientlyspecific to give rise to a "requirement" in terms of s 220 ofthe Crimes Act. This is said to be because the concept of "control" inthe definition of "related party" is vague and uncertain. All appellantsrely on this ground.(c) The Crown did not prove the transactions were not conducted on arm'slength terms. Mr Bublitz contends such proof was required to establisha breach of the related party restrictions in the Mutual Crown guarantee.(d) The Judge failed to make the requisite finding that Mr Bublitz enteredinto the transactions knowing they were in breach of the related partyrestrictions in the Mutual Crown guarantee.(e) The Crown failed to prove that each of the appellants knew ofthe requirements in the Mutual Crown guarantee and that Mr Bublitzintentionally entered into the transactions knowing they were in breachof those requirements (and Messrs McKay and Blackwood knowinglyassisted him in doing so). All appellants place emphasis on this groundand contend the Judge's reasons for finding these elements proved wereinadequate.(f) The statement concerning the Crown guarantee in the prospectuses wasnot materially false because even if the Crown withdrew the guaranteeat short notice, this would not affect its obligation to pay existingdepositors the full amount owing to them including interest.This ground relates to charges 14 and 15 and affects only Mr Bublitz.(g) The Judge did not make the requisite finding of intent for the purposesof charges 14 and 15, finding only that Mr Bublitz was reckless.(h) Mr McKay's right to a fair trial was breached because the Judgedeclined his counsel's application for additional time, before makinghis closing submissions, to enable him to consider a question trailprepared by the Judge after the Crown closing and amendments tothe charges suggested by the Judge at that stage.Should the prosecution have been stayed?Background[24] The following summary of the procedural background is largely drawn fromthe judgment of Lang J declining the appellants' stay application in September 2017.16[25] The transactions giving rise to the charges occurred between January 2009 andJune 2010. The charges were laid and the appellants arrested in March 2014. The trialin the High Court initially began on 8 August 2016 before Woolford J, six and a halfyears after the last of the impugned transactions occurred and two and a half yearsafter the appellants were arrested. When the trial commenced, Mr Bublitz faced49 charges. Mr McKay was charged as a party to 41 of these and Mr Blackwood asa party to 28.[26] Although the trial was expected to be completed within 12 weeks, this provedto be inadequate. The first witness called by the Crown was Jason Weir, aninvestigating accountant from Deloitte. His main and supplementary briefs ofevidence comprised some 550 pages and it took approximately three weeks to lead hisevidence and another three weeks for cross-examination. Mr Weir also played videorecorded interviews of the appellants and Mr Wevers conducted by the FinancialMarkets Authority (FMA), consuming a further two weeks. Because several witnesseshad to be interposed to accommodate their other commitments and Mr Weir'sunavailability, he did not complete giving his evidence until the end of the twelfthweek of the trial, the time originally allocated for entire trial.[27] By this stage, many of the charges had fallen away. On 21 September 2016the Crown elected to offer no evidence on 12 charges having considered the expertevidence the appellants proposed to call. On 14 October 2016 the Judge dischargedthe appellants on 22 further charges.16 Third stay judgment, above n 8.[28] Deficiencies in disclosure emerged while Mr Weir was giving his evidence.Mr Weir told the Court he would review all documents held by Deloitte to determinewhether any were relevant to the case. As a result, the Crown disclosed 171 furtherdocuments to the appellants in October 2016.[29] In late November 2016 the appellants applied for orders staying the chargescontending that the trial had become unduly burdensome and oppressive because ofits length. Woolford J declined these applications in the expectation the trial wouldconclude by 7 April 2017.17 However, the Judge dismissed another 18 charges.18[30] Woolford J heard a second application for stay on 2 February 2017.The appellants argued they were unfairly prejudiced by the unavailability of anintended Crown witness, Barry Jordan of Deloitte, and the Crown's proposal to callDenise Hodgkins of Deloitte instead. The Judge declined this application for reasonsgiven on 9 February 2017.19 The Judge considered any unfairness to the appellantscould be mitigated by taking a liberal view of any application by the appellants torecall Crown witnesses so that propositions they intended to put to Mr Jordan couldbe canvassed with those witnesses.20[31] The Crown closed its case on 27 February 2017. Mr Bublitz then opened hiscase and elected to call evidence. On 23 March 2017, while one of his experts wasgiving evidence, the Crown provided a list of 14,619 undisclosed documents held byDeloitte. This late disclosure was an admitted breach of the Criminal Disclosure Act2008. The taking of evidence continued until 27 March 2017 but halted at that pointbecause of disputes about disclosure.[32] On 28 April 2017 the Crown provided a further list of approximately 19,000documents from the files held by the FMA and the Crown solicitor. The Crowndisclosed a further 5,506 documents to the appellants in tranches between March andMay 2017. Ongoing disputes about disclosure issues remained unresolved byMay 2017, nine months after the trial had commenced, and the parties anticipated it17 First stay judgment, above n 8.18 At [55].19 R v Bublitz [2017] NZHC 114 [Second stay judgment].20 At [27].would take another two months to resolve the disclosure issues. The Crown was solelyresponsible for this unacceptable and wholly unsatisfactory situation.[33] This led to Woolford J's decision to abort the trial on 10 May 2017. In hisreasons given on 19 May 2017 the Judge described the Crown's admitted breaches oftheir obligations under the Criminal Disclosure Act as "seemingly unprecedented inNew Zealand".21 The Judge considered this had "restricted the choices open tothe defence in respect of the presentation of their case, both in manner and extent".22The Judge concluded that the trial had to be aborted because of the possibility ofunfairness to the appellants and the danger of a miscarriage of justice if the trial wasto proceed.23[34] On 6 June 2017 the Crown advised that it intended to proceed to a new trialagainst the appellants. At that stage, Mr Bublitz faced 13 charges of the original 49,Mr McKay, 7 of the original 41 and Mr Blackwood, 6 of the original 28 but the Crownproposed to withdraw one charge against Mr Bublitz and add a further seven.[35] The appellants applied again for a stay of the proceedings. This was heard byLang J in September 2017. The Judge declined the application for reasons set out inhis judgment delivered on 18 September 2017.24 The Judge noted that the Crown'sbreach of its disclosure obligations was not committed deliberately or in bad faith.25There was no suggestion the FMA or the Crown had endeavoured to use the criminaljustice process for improper purposes or to conduct them in a manner designed to beoppressive or burdensome to the appellants.26 The Judge considered a fair trialremained possible.27 Turning to the appellants' rights under BORA to be tried withoutundue delay, the Judge observed that other remedies would be more appropriate suchas an award of compensation if acquitted or a reduction in sentence if not.28 The Judgeconcluded by warning the Crown that it would find it difficult to resist a further21 R v Bublitz [2017] NZHC 1059 at [66].22 At [106].23 At [107].24 Third stay judgment, above n 8.25 At [63].26 At [64].27 At [65].28 At [73].application for stay if significant issues arose in the future and it did not advanceits case within an acceptable timeframe.29[36] The second trial commenced on 13 August 2018 and concluded on5 September 2018. Unfortunately, there was a further delay before the verdicts weredelivered. This did not happen until 5 February 2019 with the reasons following on21 February 2019. Mr Bublitz was sentenced on 27 March 2019.[37] It is not disputed that the extraordinary delays have had profoundconsequences for the appellants and their families, affecting their health, reputationsand financial positions. The Judge allowed a discount of 30 per cent for this atsentencing.30Submissions[38] Ms Reed QC for Mr Bublitz submits that the proper approach is to considerthe impact of the delays on him as the holder of the right to be tried without unduedelay. She says Mr Bublitz was forced to adjust his case as the Crown's theory evolvedand the particulars of the charges were modified during the first trial. If the Crownhad taken a more focused approach, Mr Bublitz would have been able to make moreeffective use of his limited financial resources in funding his defence. She argues thatthe Crown's serious breach of its disclosure obligations undermined the criminaljustice process in that it affected Mr Bublitz's ability to prepare effectively for bothtrials.[39] Because the first trial had to be aborted after nine months of hearing time,Mr Bublitz was no longer able to fund his own defence for the second trial; that choicewas taken away from him. Ms Reed submits this was plainly unfair, even though sheacknowledges Mr Bublitz was ably represented by replacement counsel funded bylegal aid. Toogood J recorded that Mr Bublitz had spent approximately $1 million incosts at the first trial of which he recovered only $10,000 following a costs awardmade by Woolford J.3129 At [74].30 Sentencing judgment, above n 9, at [93].31 At [90].[40] Ms Reed submits that the delay in this case was avoidable, undue andreprehensible. The Crown must take sole responsibility for this. Ms Reed endorsesthe observations made by Toogood J when he summarised the significant toll the delayhas had on the appellants:32The real cost that I consider should be factored in, however, is the debilitatingeffect of being on trial, in the public eye, and on matters going directly to youroccupations and business opportunities, over what must have seemed aninterminable nine months. I do not think the harmful psychological effect ofsuch a long and intense criminal fraud trial should be underestimated. I donot need to explain publicly what information has been provided to me aboutthe medical and emotional effects of the first trial and the continuing criminalprosecution on each of you. But I have given careful consideration tothe material you have put before me and I intend to take it into account tothe fullest extent I consider reasonable.[41] In these exceptional circumstances, Ms Reed submits a stay is warranted.Analysis[42] The leading authority on the principles to be applied in considering anapplication for stay of a criminal proceeding where there is State misconduct isthe Supreme Court's decision in Wilson v R.33 The Court identified two categories ofcases where a stay could be justified.34 The first is where the misconduct will prejudicethe fairness of a defendant's trial. The second is where the misconduct will underminepublic confidence in the integrity of the judicial process if a trial is permitted toproceed. The Court emphasised that the analysis is forward-looking, the focus beingon the impact of the misconduct rather than on the misconduct itself. Because ofthe public interest in the prosecution of those suspected of criminal offending, a stayis regarded as an extreme step to be taken only in the clearest of cases.35[43] Ms Reed responsibly did not directly challenge the correctness of Lang J'sdecision declining to grant a stay prior to the commencement of the second trial.We are sympathetic to the appellants given the extremely drawn out and tortuousprocess they have had to endure but we consider Lang J's reasons for declining to32 At [91].33 Wilson v R [2015] NZSC 189, [2016] 1 NZLR 705.34 At [40].35 At [60] and [121].grant a stay are unimpeachable. Ms Reed also responsibly acknowledges that a fairtrial could (and did) take place despite the delay. The disclosure breaches were seriousbut inadvertent and did not involve an abuse of the Court's processes. We considerthe issue of thrown away costs should be dealt with by an award of costs. As Lang Jsaid, the other consequences of the delay are more appropriately dealt with byremedies other than stay, including by the discount he foreshadowed could be allowedat sentencing in the event convictions were entered.[44] There was no material change of circumstance that could justify revisitingLang J's decision in the High Court. While not determinative, we note that no furtherapplication for a stay was advanced before Toogood J. We are not persuaded thatthe extreme step of a stay could be justified. This ground of appeal, which wasadvanced only by Mr Bublitz, must fail.Was the definition of "control" in the Mutual Crown guarantee sufficientlyspecific to found a "requirement" for the purposes of s 220 of the Crimes Act?[45] Section 220 of the Crimes Act relevantly provides:220 Theft by person in special relationship(1) This section applies to any person who has received or is in possessionof, or has control over, any property on terms or in circumstances thatthe person knows require the person—(b) to deal with the property, or any proceeds arising from theproperty, in accordance with the requirements of any otherperson.(2) Every one to whom subsection (1) applies commits theft whointentionally fails to account to the other person as so required orintentionally deals with the property, or any proceeds of the property,otherwise than in accordance with those requirements.[46] It is not disputed that Mr Bublitz had control over the property of Mutual at allrelevant times. The introductory words in subs (1) were therefore satisfied. The "otherperson" for the purposes of subs (1)(b) is the Crown. The "requirements" relied onare those in the Mutual Crown guarantee, namely the restrictions on related partytransactions. The definition of "related party" in the guarantee incorporatesthe definition of related party in s 157B of the Reserve Bank of New Zealand Act 1989as if the Principal Debtor under the guarantee (Mutual) was a deposit taker. However,the definition is expanded in the guarantee to include:"any Person [Person A] who controls the Principal Debtor [Mutual] and anyPerson [Person B] who is controlled by any such Person [Person A]".(Interpolations added).Under this definition, Persons A and B are both related parties of Mutual. The Crowncase is that Viaduct fell within the definition as Person B. This is because Mr Bublitz[Person A] controlled Mutual, and Viaduct [Person B] was also controlled byMr Bublitz [Person A]. The question of control of Viaduct for the purposes ofthe guarantee is accordingly pivotal. Absent such control, the transactions were notrelated party transactions to which the restrictions in the Mutual Crown guaranteeapplied and charges 10–12 would necessarily fail. Similarly, for the purposes ofcharge 13, the Crown had to prove Mr Bublitz controlled Mutual and Hilltop atthe relevant time.Definition of "control"[47] The definition of "control" is set out in cl 1.2(f) of the Mutual Crownguarantee. Subclause (i) incorporates the definition of a subsidiary for the purposesof GAAP. The Judge found that Mr Bublitz did not control Viaduct in terms of thisdefinition. The sole focus shifted to whether Mr Bublitz nevertheless controlledViaduct in terms of the alternative definition of "control" in cl 1.2(f)(ii) of the deed.Clause 1.2(f) reads:1.2 ConstructionIn this Deed, unless the context requires otherwise:(f) Control: a Person ("A") is "controlled" by another Person ("B") if:(i) A is a subsidiary of B under the law of incorporation of A orfor the purposes of GAAP; or(ii) B is able to exercise real or effective control, directly orindirectly, over A or over a material part of A's business oraffairs (whether pursuant to a contract, an arrangement or anunderstanding, as a result of the ownership or control ofsecurities or other interests in or issued by A, or otherwise)except where A is a natural person and B's control arisessolely under an enduring power of attorney granted by A infavour of B.[48] By comparison, the definition of "control" in the Viaduct Trust Deed relied onby the Crown for charges 1–9 was based on an accounting standard, NZ IAS 24:Control is the power to govern the financial and operating policies of an entityso as to obtain benefits from its activities.High Court judgment[49] As noted, the Judge was not satisfied Mr Bublitz had control over Viaduct inthe sense used in the Viaduct Trust Deed, namely the power to govern the financialand operating policies of Viaduct at any material time so as to obtain benefits from itsactivities. This was because Mr Wevers owned all the shares in Phoenix which in turnowned the shares in Viaduct and Messrs Wevers and McKay were its sole directorsuntil September 2009 when Mr Wevers resigned. The Judge was not satisfiedthe Crown had proved its case that Mr Wevers had ceded control over Viaduct fromthe time it was acquired in February 2009 pursuant to "an abiding secret arrangement".The transfer by Mr Wevers of a 51 per cent shareholding in Phoenix inSeptember 2009 gave rise to a presumption that Mr McKay controlled Viaduct interms of the accounting standards and there was no evidence that Mr Bublitz assumedcontrol at that point.36 The Judge summarised the position in these terms:[212] I conclude, therefore, that it is reasonably possible that, immediatelyafter the acquisition of Viaduct, Mr Bublitz did not have control of the financecompany by virtue of an abiding, secret arrangement with Mr Wevers that hewould do so. It is reasonably possible that he was content at that stage to usehis considerable influence over Viaduct as its principal funder and his abilityto engage in financial transactions with Viaduct which had the potential for itto obtain revenue from [the] vending in [of] Hunter assets and ultimately tosecure the repayment of those loans for further lending.[213] As defence counsel were at some pains to point out, it is by no meansclear that at the time [Viaduct] was acquired it was doomed to fail.While there is no doubt that a number of the Hunter projects were in financialdifficulty, the injection of funding through the acquisition of the financecompany and the access to its investor funds created opportunities forthe growth of both Hunter and the finance company's business. There wasnothing inherently unlawful or improper in the plan to acquire a financecompany for the purpose of providing access to its investors' funds.Moreover, [Viaduct] was acquired as a going concern with existing investors36 Verdicts judgment, above n 1, at [220].and the potential for a significant amount of business other than throughHunter activities. The evidence established that the transactions involvingHunter assets and entities did not represent even a majority of the financecompany's business.[220] The departure of Mr Wevers from Viaduct at the end of September2009 changed the dynamic for both the governance and management ofthe finance company. The 51 per cent shareholding in Phoenix gave riseto a presumption that Mr McKay controlled the holding company and Viaduct,at least in terms of the accounting standards. It follows that, for the Crown toprove that Mr Bublitz was in control of Viaduct in terms of the accountingstandards after the transfer of a controlling interest to Mr McKay, it wouldhave to prove that there was an agreement ceding such control to him. There isno evidence that that was the case and the Crown did not seek to argue thatthere was evidence from which I could reach the conclusion, beyondreasonable doubt, that Mr Bublitz assumed control at that point. [50] However, for the purposes of the Mutual Crown guarantee, the Judgeconsidered it was not necessary for the Crown to show that Mr Bublitz had the abilityto control Viaduct through a contract, arrangement, shareholding or other interest.37The Judge recorded that counsel had not addressed him on the meaning of "control"under cl 1.2(f)(ii) of the Mutual Crown guarantee.38 He considered the question wassimply whether Mr Bublitz "actually exercised control" at the relevant times.39In concluding Mr Bublitz did so, the Judge said:40Nevertheless, I find that, notwithstanding the absence of an agreement, anypresumption that Mr McKay controlled Viaduct by reason of his 51 per centshareholding in Phoenix is displaced by significant evidence satisfying mebeyond doubt that Mr Bublitz had either directly, or at least, indirectly real oreffective control of Viaduct throughout the period of the alleged offending.Submissions[51] The appellants do not contest the Judge's conclusion that Mr Bublitz had realor effective control of Viaduct for the purposes of the Mutual Crown guarantee atthe time of the transactions giving rise to charges 10–12. Nor is there any appealagainst the Judge's finding that Mr Bublitz controlled Hilltop for the purposes ofcharge 13. We have not been asked to reconsider these issues. The sole issue for us37 At [229].38 At [225].39 At [225].40 At [229].on this ground of appeal is an argument that does not appear to have been raised beforeToogood J, namely that the definition of "control" is insufficiently certain to amountto a requirement under s 220 of the Crimes Act.[52] Ms Reed submits the definition of "control" in the Mutual Crown guarantee isproblematically vague, being essentially whether there was control in any broad sense.She notes that the Judge was not satisfied Mr Bublitz had control of Viaduct in termsof the alternative definition relied on by the Crown under the New Zealand accountingstandards. Ms Reed argues the meaning of "control" is open to differences of opinionmaking it difficult for a party to anticipate whether their actions would render themcriminally liable.[53] Mr Corlett QC for Mr Blackwood makes the same submission. He argues thatthe components of the test — "real or effective control, directly or indirectly",howsoever arising, exercised over all, or a "material part", of the business — indicatecomplexity and uncertainty and accordingly lack the necessary specificity to amountto a legal requirement for the purposes of s 220. He contends a defendant would havedifficulty determining whether control had been informally ceded so that it was being"indirectly" exercised. To illustrate this, Mr Corlett points out that the Judge wasrequired to make a qualitative assessment based on an evaluation of circumstances thatoccurred over more than a year.[54] Mr Bradford for Mr McKay adopted the submissions made by Ms Reed andMr Corlett on this issue.Analysis[55] The circumstances giving rise to a requirement for the purposes of s 220 wereconsidered by this Court in Nisbet v R.41 This Court concluded that a requirement willbe established if there is a contractual obligation to deal with property in a particularway.42 However, as Lang J explained in R v Whale, to come within the scope of s 220a person must be able to identify readily the nature and scope of the obligation41 Nisbet v R [2011] NZCA 285, [2011] 3 NZLR 4.42 At [33].the breach of which would amount to a criminal offence.43 So, for example,a contractual requirement to carry on business in a "prudent and businesslike manner"would not suffice.[56] In R v Sullivan, Heath J considered whether a comparable provision in a Crownguarantee given in respect of South Canterbury Finance Ltd was sufficient to amountto a requirement under s 220.44 The Judge was satisfied it did.45 We agree.[57] Unlike a "prudent and businesslike manner" covenant, the concept of "control"has an absolute character. It permits only one correct answer; Mr Bublitz either hadcontrol as defined or he did not. In our view, the concept of control in the MutualCrown guarantee is sufficiently hard-edged to qualify as a requirement forthe purposes of s 220. Indeed, it might be thought odd if the concept of "control" wasconsidered to be too uncertain to qualify as a requirement for the purposes of s 220given that very word is used in the section — "This section applies to any person who has control over, any property ". The appellants' submissions on this point mayhave greater significance on the issue of whether it was proved they acted withthe necessary intent, knowing the restrictions applied to the transactions because ofthe extended definition of control and proceeding with them knowing they breachedthose restrictions.Did the Crown need to prove that the transactions were not conducted on arm'slength terms?[58] Clause 6.2(b) of the Mutual Crown guarantee prohibited Mutual from enteringinto any transaction with a related party having a value exceeding one per cent ofMutual's Total Tangible Assets without the prior written consent of the Crown unless:(i) that transaction is on arm's length terms; and(ii) an independent expert approved by the Crown in writing first certifiesto the Crown in writing that the transaction is, in the opinion of thatexpert, on arm's length terms.43 R v Whale [2013] NZHC 731 at [489].44 R v Sullivan [2014] NZHC 2501.45 At [482].[59] The Crown relied solely on the failure to comply with condition (ii). It iscommon ground that this condition was not complied with prior to the entry ofthe relevant transactions. Nevertheless, Ms Reed submits that a breach ofthe provision should not attract liability where the underlying transaction wasconducted on arm's length terms. We disagree. The appellants were not entitled todisregard the requirement for independent certification. Both requirements wereimportant and had to be met. The Crown did not have to prove that the impugnedtransactions were not conducted on arm's length terms. Proof of a failure to complywith either of these cumulative requirements was sufficient to establish a breach ofthe related party restrictions in the Mutual Crown guarantee.Did the Judge make the requisite finding that Mr Bublitz entered intothe transactions knowing they were in breach of the related party restrictions inthe Mutual Crown guarantee?[60] Ms Reed accepts the Judge correctly noted that on charges 10–13 the Crownhad to prove beyond reasonable doubt that Mr Bublitz:46(a) knew of the obligation; and(b) dealt with the funds in a manner he knew and intended was in breachof the obligation.[61] However, Ms Reed submits the Judge did not make the requisite findings ofintent in relation to Mr Bublitz. She submits the Judge found only that Mr Bublitzdeliberately entered into the transactions, which is not enough. She relies onthe following passage in the judgment to support this submission:47It could not reasonably be suggested that Mr Bublitz did not know aboutthe transactions which are said to have been undertaken in breach ofthe related party provisions in Mutual's Crown guarantee: he was in controlof the entities involved; he either directed or was informed and approved ofeach transaction, either expressly or by silent acquiescence. As I have said,nothing was done contrary to Mr Bublitz's intentions.46 Verdicts judgment, above n 1, at [110].47 At [292].[62] Ms Reed submits this finding simply indicates that Mr Bublitz was aware ofthe transactions and approved them, not that he was aware they were in breach ofthe related party lending requirements in the Mutual Crown guarantee.[63] Ms Reed's submission cannot be sustained given the Judge's further finding:48I am satisfied, however, that the only reasonable inference from the way inwhich the defendants operated after the acquisition of Mutual is that each ofthem was fully aware that what was done was done contrary to the obligationsimposed by the Crown guarantee in the interests of Mutual's investors.[64] Although this finding appears in a passage of the judgment dealing withsubmissions advanced on behalf of Mr McKay and Mr Blackwood, it is clear fromreading the entirety of this section of the judgment that this finding was intended toapply equally to all three appellants. We reject the suggestion that the Judgeoverlooked making any finding on this essential element of these charges in respect ofMr Bublitz. The Judge clearly identified this issue in the question trail he preparedand worked from. We are satisfied his reference to "the defendants" in the paragraphquoted above was intended to include Mr Bublitz.Did the Judge give adequate reasons for finding that Mr Blackwood andMr McKay acted with the necessary intent?The Judge's reasons[65] The Judge's question trail addressed the issue of whether each of the appellantsparticipated in the transactions knowing that they were in breach of the related partylending restrictions in the Mutual Crown guarantee. The example set out inthe Verdicts judgment is for charge 12 and reads as follows:496. At the time of the purchase, Mr Bublitz knew that:a. Mutual's investor funds were required to be dealt with inaccordance with restrictions on related party transactionscontained in the Crown guarantee; andb. the purchase breached those restrictions.7. At the time of the purchase, Mr McKay and Mr Blackwood(as the case may be):48 At [298].49 At [131].c. knew:i. Mr Bublitz had control over Mutual's investor funds;andii. Mutual's investor funds were required to be dealt within accordance with restrictions on related partytransactions contained in the Crown guarantee; andiii. Mr Bublitz intentionally dealt with those funds byprocuring Mutual to purchase the loan from Viaduct;andiv. the purchase breached those restrictions?[66] Thus, these elements of charges 10–13, covering all appellants, were to bedetermined by the answers to 10 questions for each charge (except for charge 13 whichMr McKay did not face). This gave a total of 36 questions. The Judge answered thesequestions collectively in just 10 paragraphs of his 315-paragraph judgment.50Only a few of these paragraphs directly addressed the appellants' knowledge ofthe related party restrictions in the Mutual Crown guarantee. We set those out at [69]and [70] below with the relevant conclusions shown in italics.[67] The Judge commenced his analysis by referring to the purchase of Viaduct andthe way it was subsequently managed by the appellants, reasoning that this provided"a relevant backdrop".51 The Judge noted that Mr Bublitz involved Mr McKay andMr Blackwood in Viaduct's proposed purchase of Mutual and sought their input.52The Judge also noted that Mr Blackwood conducted due diligence of Mutual on behalfof Viaduct.53 However, the Judge makes no mention of the Mutual Crown guaranteeor its provisions restricting related party lending in these background paragraphs.[68] The Judge's conclusion that Mr Bublitz knew the transactions breachedthe related party restrictions in the Mutual Crown guarantee was primarily based onhis correspondence with the Treasury prior to Hunter's purchase of Mutual. The Judgerefers to a letter dated 9 November 2009 signed by Mr Bublitz on behalf of HunterCapital Group Ltd and by Lindsay Kincaid, a director of Mutual, assuring the Treasurythat in the initial period following purchase: Hunter did not intend to sell any assets toMutual; Mutual's operations would remain largely intact with Mr Kincaid remaining50 At [282]–[291].51 At [282].52 At [283].53 At [284].as an independent director; and Hunter did not intend to take full control of Mutualuntil 31 October 2010, following the expiry of the Crown guarantee. Although therewas no suggestion of any dishonesty on the part of Mr Kincaid, the Judge found thatMr Bublitz's assurances were untrue and deliberately misleading given how quicklyhe proceeded to take control of Mutual and enter into such transactions.54 The first ofthese transactions was entered into on 29 January 2010, less than two months aftersettlement of the purchase.[69] The Judge's conclusion that Mr Bublitz understood the related partylimitations in the Mutual Crown guarantee appears in the following paragraph wherehe summarises the exchange of correspondence with the Treasury that followedthe 9 November 2009 letter:[288] The Treasury declined to indicate any approval of the transaction[the purchase of Mutual by Hunter] but did say that it would appreciateclarification on whether any of the current assets of Viaduct would be sold toMutual. Mr Bublitz responded that Mutual "currently" did not intend topurchase any assets from Viaduct but he said that, if in the future Mutual didconsider purchasing assets from Viaduct, an independent expert would beemployed to assess the merits of any such transaction and to ensure it was onarms' length terms. That assurance reflected Mr Bublitz's knowledge andunderstanding of the related party limitations in the Mutual Crown guarantee.(Emphasis added).[70] The Judge found that Mr McKay and Mr Blackwood knew of and acquiescedin the false statements in the letter to the Treasury on 9 November 2009.55 The Judgeconsidered that Mr Blackwood and Mr McKay were "deeply involved inthe acquisition process" for Mutual.56 The Judge summarised his reasons forconcluding that Mr McKay and Mr Blackwood also understood the related partyrestrictions in the Mutual Crown guarantee as follows:[289] Both Mr Blackwood and Mr McKay were deeply involved in theacquisition process and they became discretionary beneficiaries of the MutualTrust which was established by Mr Bublitz. 54 At [287].55 At [287].56 At [284] and [289].[291] Bearing in mind the close working relationships, the roles ofMr McKay and Mr Blackwood in all of the steps taken to acquire the financecompany, and the extent to which each of them was involved in the operationof both Mutual and Viaduct after Mutual's acquisition, I am wholly satisfiedthat Mr McKay and Mr Blackwood were fully aware of the nature ofthe related party provisions in the Crown guarantee.(Emphasis added).Submissions[71] The appellants submit the Judge's reasons for making these findings wereinadequate. Mr Corlett, who took the lead on this part of the argument, submits thatthe Judge failed to assess Mr Blackwood's position in respect of each chargeindividually and was wrong to adopt a global approach for all appellants on all chargescovering the transactions in 2010 based on a pattern of conduct from January 2009onwards. Mr Corlett makes the following five submissions:(a) The Judge stated he was "wholly satisfied that Mr McKay andMr Blackwood were fully aware of the nature of the related partyprovisions in the Crown guarantee" but he did not identifythe documents or recite the facts he relied on to draw this inference.57Nor did the Judge address the defence case for Mr Blackwood that itwas reasonably possible he did not turn his mind to the related partydefinition in the guarantee, referred to in the charge asthe "replacement Crown guarantee".(b) There is no analysis in the judgment as to how and why Mr Blackwoodknew that each transaction exceeded one per cent of Mutual's tangibleassets at the relevant time or was not conducted on arm's length terms.Mr Blackwood's knowledge and intention to assist a breach ofthe restrictions in the Mutual Crown guarantee is not detailed anywherein the judgment, let alone on a charge by charge basis.57 At [291].(c) There is no analysis of how Mr Blackwood is said to have known thatMr Bublitz was in control of Hilltop at the time of the loan transactionsgiving rise to charge 13.(d) The Judge made extensive reference to circumstances that occurredbefore Mr Blackwood began work as a consultant in March 2009 andbefore he became a director of Viaduct on 29 September 2009 but didnot detail the evidence relied on to find that Mr Blackwood acquiredknowledge of those prior circumstances.58(e) The Judge recorded his ruling that "a determination of which documentis admissible against whom and for what purpose was best made ona document by document basis in the context of reaching my findingson the facts".59 Despite this, there is no explanation for admittingcontested documents including Mr Bublitz's 9 November 2009 letter tothe Treasury. Although there was no evidence Mr Blackwood ever sawthis letter, the Judge relied on it in making his findings against him.60[72] Mr Bradford makes a similar submission on behalf of Mr McKay. He submitsthat contrary to the Judge's comment about "close working relationships", there wasconsiderable evidence showing that prior to Mr Wevers' departure from Viaduct inSeptember 2009, Mr McKay took no part in key decision-making and was excludedfrom regular management meetings and important correspondence betweenMr Wevers and Mr Bublitz. Mr Bradford echoes Mr Corlett's submission that therewas no evidence Mr McKay was aware of the terms of the Mutual Crown guarantee,particularly the extended definition of control in cl 1.2(f)(ii). Mr McKay was nota director or officer of Mutual and was not a signatory to the guarantee. Mr Bradfordsubmits that the correct interpretation of the definition of control is difficult and opento legitimate debate even among experts.58 At [295].59 At [75].60 At [287].[73] Mr Johnstone submits the Crown did not need to prove that the appellantsunderstood the legal interpretation of each provision in the Mutual Crown guarantee;it only had to prove the appellants believed the transactions were impermissible.He argues that if the Crown proved the appellants believed the transactions wereimpermissible, this could only have been because they breached the related partyrestrictions in the Mutual Crown guarantee.[74] Mr Johnstone defends the Judge's approach of assessing the appellants'knowledge globally. There was never any suggestion that the appellants' knowledgeand involvement changed during the period covered by the charges, 25 January 2010to 4 June 2010. In response to Mr Corlett's submission that the Judge made no findingthat Mr Blackwood intended to assist in the breach of the requirements underthe Mutual Crown guarantee, Mr Johnstone says "such a finding was obvious and didnot need to be made — the Court did not need to deal with every factual argument".He relies on this Court's observation in Tallentire v R that "[w]here it is shown thataccused persons knew [] they were breaching the relevant obligation when theyacted, an inference of intentional breach will be irresistible".61Analysis[75] The Supreme Court recently considered in Sena v Police the scope and extentof reasons required in a judge-alone trial of a criminal case.62 The Supreme Courtconfirmed the reasons required were as described by this Court in R v Connell andR v Eide.63 The judgment must contain an adequate survey of the facts, the criticalissues must be identified and an explanation given of how and why those issues havebeen resolved.[76] The Verdicts judgment is lengthy by any measure, comprising 315 paragraphs.There can be no criticism that the Judge did not adequately survey the facts or explainthe scheme of the alleged dishonesty. Nor can there be any criticism that the Judgefailed to identify the elements of the charges. With the assistance of counsel,61 Tallentire v R [2012] NZCA 610, [2013] 1 NZLR 548 at [63].62 Sena v Police [2019] NZSC 55.63 R v Connell [1985] 2 NZLR 233 (CA) at 237–238; and R v Eide [2005] 2 NZLR 504 (CA)at [20]–[21].he prepared a detailed question trail identifying the factual questions he had to answerto reach his verdicts on each charge. The Judge addressed the substance ofthe appellants' case on these questions in a logical order in clearly signposted sectionsof his judgment. The Judge made clear findings on the critical issues and explainedhis reasons for reaching those conclusions. The judgment was fully reasoned in thatsense.[77] We accept that the reasons are spare on the critical issue of the appellants'knowledge. We address below whether the reasons were sufficient in the context ofconsidering the appellants' overall contention that the Judge erred in his assessment ofthe evidence and in concluding it was sufficient to justify the convictions.Was the evidence sufficient to prove the appellants acted with the necessaryknowledge and intent?Crown submissions[78] Mr Johnstone referred in his written submissions to 11 "actions" he saidsupport the Judge's findings that the appellants were aware of the requirements set outin the Mutual Crown guarantee and entered into the impugned transactions knowingthat they were in breach of those requirements. Of these 11, only four were referredto in the Verdicts judgment. We start with them.(i) Mr Bublitz controlled Viaduct[79] Mr Johnstone first refers to a paragraph in the section of the Verdicts judgmentwhere the Judge considers whether Mr Bublitz had control of Viaduct for the purposesof the Viaduct Trust Deed. The Judge observed that Mr Bublitz used language suchas "fronts", "warehousing" and transferring assets "off balance sheet". The Judgeconsidered that this showed "Mr Bublitz was keen to avoid full transparency inthe revised arrangements for the shareholdings and directorships in the Hunter Groupassets". The Judge said that "[w]hile those arrangements were intended to distanceMr Bublitz from control of the Hunter entities rather than Viaduct, they demonstrateMr Bublitz's awareness of the implications of the related party provisions forViaduct's dealings with them".64[80] This evidence related to the period leading to the purchase of Viaduct inFebruary 2009, long before the purchase of Mutual was in prospect. There is no doubtMr Bublitz and Mr McKay were acutely aware of the related party restrictions inthe Viaduct Trust Deed and devoted considerable attention to this issue in the periodleading to the purchase of Viaduct. Mr McKay compared the related party lendingrestrictions in the trust deeds of four potential target finance companies includingViaduct. He prepared a schedule summarising his findings and sent this to Mr Bublitzand Mr Wevers. Mr McKay also prepared a five-page memorandum dated12 December 2008 dealing with related party issues and provided this to Mr Bublitzand Mr Wevers for their consideration. However, this evidence does not takethe Crown very far because the Judge was not satisfied Mr Bublitz controlled Viaductfor the purposes of Viaduct's Trust Deed at any time. This accorded with Mr McKay'sassessment and the professional advice they received at the time of the purchase ofViaduct.[81] Beyond demonstrating awareness of related party lending issues generally,which was what the Judge drew from this, these steps taken by Mr Bublitz andMr McKay in late 2008 and early 2009 do not assist the Crown to prove that any ofthe appellants was aware of the particular restrictions in the Mutual Crown guarantee(the replacement guarantee dated 8 December 2009) or that they participated inthe impugned transactions in 2010 knowing these breached those restrictions.(ii) Mr Bublitz controlled Mutual[82] The second reference is to a paragraph in the part of the judgment dealing withwhether Mr Bublitz had control of Mutual, about which there is no dispute. The Judgerefers to "the inter-connectedness of the finance companies and the entities inthe Hunter Group Mr McKay sought to save". The Judge makes particular mentionof an email from Mr McKay to Mr Bublitz and Mr Chevin on 24 November 200964 Verdicts judgment, above n 1, at [233].lamenting on how little interest there was in Viaduct's prospectus and "wonderingwhether it is not time to put a bullet to all of this".65[83] It is clear that at this time Mr Bublitz and Mr McKay were working hard tokeep Mr Bublitz's various business interests afloat. By 24 November 2009 it wasobvious Viaduct would not be able to provide significant further lending to Hunter.This is what led to the purchase of Mutual. The email says nothing about the MutualCrown guarantee or any restrictions on related party lending in it. Further,Mr Blackwood is not referred to in the email, he was not sent a copy of it and there isno evidence he saw it.(iii) Involvement in purchase of Mutual[84] The third reference is to two paragraphs in the section of the judgment headed"The defendant's knowledge and intent".66 Here the Judge discusses the proposedpurchase of Mutual and the involvement of Mr Blackwood and Mr McKay inthe process. The Judge mentions that Mr Blackwood and David Macmillan, who wassenior executive credit, conducted due diligence on behalf of Viaduct, which wasthe intended purchaser at that stage.[85] Mr Kincaid gave evidence about the due diligence process which appears tohave taken place on 9 November 2009. Mr Kincaid said that in preparing for the duediligence, he and his staff assembled the key loan files and loan histories. He expecteddue diligence would take two to three days to complete. However, to his surprise,Mr Blackwood and Mr Macmillan spent only two and a half hours on the entireprocess. Mr Kincaid described their review as "surprisingly cursory" and he said they"did a really bad job of it". Significantly, as we discuss further below, there was noevidence Mr Blackwood reviewed Mutual's then operative Crown guarantee whichwas contained in a deed dated 13 November 2008 and a supplemental deed dated24 November 2008. As noted, the Mutual Crown guarantee the subject of the chargeswas not executed until 8 December 2009, one month after Mr Blackwood'sdue diligence.65 At [255].66 At [283]–[284].(iv) Letter to the Treasury dated 9 November 2009[86] The Judge refers in the same paragraph to the joint letter to the Treasury dated9 November 2009 signed by Mr Bublitz as a director of Hunter Capital Group Ltd andMr Kincaid, as a director of Mutual. The initial draft of this letter was prepared byMr McKay and sent to Mr Bublitz on 5 November 2009. Its purpose was to advisethe Treasury that Mr Bublitz's interests (Hunter Capital Group Ltd) had signed anagreement to acquire Mutual and to provide assurance that the Crown's exposureunder its guarantee would not increase as a result. This letter supports an inferencethat Mr Bublitz and Mr McKay were aware of the related party restrictions in the thencurrent Crown guarantee because the letter refers to them:Although [Viaduct] is not a related party of [Mutual], any transactionscontemplated between [Mutual] and [Viaduct] will be treated as if they arerelated party transactions for the purposes of the Crown Guarantee.[87] However, this letter does not assist the Crown's case against Mr Blackwoodfor two principal reasons. First, as the Judge noted, the letter was drafted byMr McKay. Although the Judge found that Mr Bublitz's statements to Treasury in thisletter "were known and acquiesced to" by Mr Blackwood, he does not explainthe basis for this conclusion.67 Mr Johnstone did not contradict Mr Corlett'scontention that there was no evidence Mr Blackwood saw this letter. Secondly, evenif Mr Blackwood had seen it, the letter suggests Messrs Bublitz and McKayconsidered Mutual and Viaduct were not related parties, a view the Judge shared atleast in terms of the definition of "control" for the purposes of the Viaduct Trust Deedand in terms GAAP, the first part of the definition of control in the Mutual Crownguarantee. The assurance in the letter is premised on the related party restrictions inthe Mutual Crown guarantee not applying to transactions with Viaduct and hencethe offer of an undertaking, independent of the guarantee, as to how any suchtransactions would be dealt with. The charges allege breaches of the related partyrestrictions in the Mutual Crown guarantee, not a breach of this separate undertakingthe whole basis of which was that the relevant restriction in the guarantee would notapply to such transactions.67 At [287].[88] We now turn to the other seven actions Mr Johnstone relies on to supportthe Judge's finding of knowledge and intent against the appellants on each charge.We deal with these in chronological order.(v) Viaduct credit submissions prepared in August 2009[89] Mr Johnstone refers to three credit submissions prepared in August 2009 forViaduct transactions. We are unable to see the relevance of these documents tothe present issue. The appellants were acquitted on all charges arising out of Viaducttransactions in 2009, all of which pre-dated the purchase of Mutual in December 2009.(vi) Finance company with Crown guarantee targeted[90] Mr Johnstone next refers to the fact that a finance company that had the benefitof a Crown guarantee was targeted. He also drew attention to evidence showingthe appellants discussed in November 2009 Treasury's likely concerns aboutthe Crown's exposure under the guarantee if Mr Bublitz was to purchase Mutual.This pre-dates the Mutual Crown guarantee. It does not assist the Crown in provingthe appellants knew of the particular restrictions in the Mutual Crown guarantee orthat they participated in the transactions knowing they were in breach of thoserestrictions.(vii) Credit submission for Homebush loan dated 5 February 2010[91] The next document relied on is a credit submission to Mutual's board jointlysigned by Mr Blackwood in his capacity as a consultant and Mr Macmillan as seniorexecutive credit. This document is dated 5 February 2010 and concerns the proposedpurchase from Viaduct of part of the Homebush loan giving rise to charge 10.Under a heading "Treasury Matters" the submission records that "[Mutual] hasundertaken to Treasury that it will procure an independent report on any transactionswith [Viaduct]". This is consistent with the 9 November 2009 letter that the relatedparty restrictions in the Mutual Crown guarantee would not apply to transactions withViaduct but would be subject to an independent undertaking. The credit submissionindicates Mr Blackwood knew of the undertaking to the Treasury, but it does not showhe knew the transaction would be caught by the related party restrictions in the MutualCrown guarantee. On the contrary, the credit submission is consistent withthe reasonable possibility Mr Blackwood considered the restrictions in the MutualCrown guarantee did not apply to this transaction.(viii) Ms Groom's concern about inter-company transactions[92] Next, Mr Johnstone drew our attention to the evidence of Sandra Groom whowas employed with Viaduct as a finance manager in January 2010. Ms Groom saidshe was told when she first started working there that expert advice had establishedViaduct and Mutual were not related parties. However, she said she became concernedin March and April 2010 about inter-company transactions between Viaduct andMutual. This evidence does not advance the Crown's case on this issue becauseMs Groom said she did not raise her concerns with anyone.(ix) Email from Mr McKay on 29 March 2010[93] The Crown also relies on an email Mr McKay sent to Messrs Bublitz,Blackwood and Chevin on 29 March 2010 with the subject heading "Why can't weget anything done?". Mr McKay commences by saying Mr Bublitz had asked him"why it is so difficult to get anything like the IM's and capital raisings done".Mr McKay offers several observations in response. Mr Johnstone relies particularlyon the following two passages:We are spending a huge amount of time every week fighting fires – be itKiwibank, IRD, Hilltop creditors, keeping [Viaduct] afloat All these issuesare major drains in time that is not being dedicated to 'operating the business'– it feels like a full time job just to keep on top of the cash flow and cashmanagement issues around the group because cash is so tight. We are barelyrunning the businesses that we have because so much time is devoted tostopping it all from falling over.Apart from digging [Mr Bublitz] out of the shit just what are we trying toachieve?[94] This email indicates the companies were then operating as a single group forthe ultimate benefit of Mr Bublitz. It may have some relevance to whether Mr Bublitzwas in control of all relevant entities — Mutual, Viaduct and Hunter. However, it doesnot assist in determining whether the appellants were aware of the relevant restrictionsin the Mutual Crown guarantee and were engaging in transactions they knew were inbreach of them. This is no doubt why the Judge did not make any reference to thisdocument in his reasons for finding that the knowledge elements of the charges wereproved beyond reasonable doubt.(x) Meeting with KiwiBank on 1 April 2010[95] Mr Johnstone also places reliance on a meeting Messrs Bublitz and Blackwoodattended with various KiwiBank personnel on 1 April 2010. Mr Bublitz stated at thismeeting that the withdrawal of the Crown's guarantee had caused significant damageto Viaduct's brand and he intended to trade Viaduct for 12–18 months beforepotentially merging it with Mutual. This indicates Mr Bublitz regarded himself ashaving the ability to control both companies. The evidence also assists the Crown toprove that Mr Blackwood was aware of this. However, it does not help prove thatthe appellants knew of the relevant restrictions in the Mutual Crown guarantee or thatthe transactions underpinning charges 10–13 were caught by those restrictions becauseof the extended definition of "control".(xi) Credit submissions relating to Hilltop[96] Finally, Mr Johnstone places reliance on credit submissions prepared forHilltop relating to Mutual's purchases of parts of a working capital facility Viaducthad made available to it. These were the linked transactions underpinning charge 12.[97] The first of these credit submissions is dated 6 April 2010 and concernsthe proposed purchase by Mutual from Viaduct of part ($230,000) of a working capitalfacility provided to Hilltop of $1.5 million. The submission was prepared in the nameof Mr Blackwood but is not signed by him. Jon Pearse, a forensic manager at Deloitte,gave evidence at the first trial (which was received by consent at the second trial) thatthis document was created at 8.34 am on 16 April 2010 and last modified one hourlater at 9.34 am. The author is shown as "Bridget". Mr Weir confirmed incross-examination at the second trial there were no documents indicating thatMr Blackwood prepared this credit submission or that he signed it. Mr Weir agreedthat Mr Chevin appears to have prepared the document.[98] The second credit submission is dated 27 April 2010 and concerns Hilltop'srequest for a further advance from Mutual of $190,000. This submission also carriesMr Blackwood's name but there is no evidence he prepared it or signed it. Mr Weirconfirmed in cross-examination that the document was prepared by Sophie Gill.[99] These credit submissions do not assist the Crown to show the appellants knewthe transactions were between related parties as defined by the Mutual Crownguarantee.[100] At the hearing of the appeal, Mr Johnstone also placed reliance on Viaduct'sprospectus dated 9 October 2009. This was signed by Mr McKay and Mr Blackwoodas the directors of Viaduct. Mr Johnstone draws attention to the directors' response tothe reasons given by the Crown for withdrawing its guarantee. Mr Johnstone claimsthe directors "failed to mention the nature of Mr Bublitz's role in Viaduct".[101] We do not consider that this evidence materially advances the Crown's positionon this aspect of the case. First, as Mr Johnstone acknowledges, it concernsthe Viaduct Crown guarantee and pre-dates the purchase of Mutual. The appellantswere never charged with breaching the Viaduct Crown guarantee and the Judge wasnot persuaded Mr Bublitz controlled Viaduct for the purposes of the Viaduct TrustDeed. Secondly, each of the Crown's concerns leading to the withdrawal ofthe guarantee is set out in italics and sequentially answered over the course of sevenpages of the prospectus. These included the Crown's concerns about the transactionsbetween Viaduct and Hunter and its view that "the transactions surroundingthe purchase of Viaduct appear to have been designed primarily to advancethe interests of Mr Bublitz". It is not apparent to us that the directors' responses tothese concerns as set out in the prospectus were not genuinely maintained by them atthat time. Their responses are consistent with the Judge's conclusion the appellantsmay have believed Mr McKay controlled Viaduct at that time, not Mr Bublitz.Thirdly, Mr Bublitz's engagement with Viaduct under a management services contractat an annual fee of $240,000 plus GST was disclosed. If anything, this evidence tendsto support the appellants' contention (and the Judge's conclusion) that Hunter andViaduct were not related parties under the terms of the Viaduct Trust Deed ofthe Viaduct Crown guarantee. This was the very reason for the Treasury's concernabout the capital notes issued by Viaduct to Hunter, which was recorded inthe prospectus as follows:The capital notes have the added benefit that neither Mr Bublitz nor interestsassociated with him are considered a related party under the terms ofthe Viaduct Trust Deed and the Crown's Deed of Guarantee(Emphasis added).Mr Bublitz[102] We consider the Judge was correct to conclude that Mr Bublitz knew ofthe related party restrictions in the Mutual Crown guarantee and that the transactionsunderpinning charges 10–13 did not comply with those restrictions. There is ampleevidence to support that conclusion. The real issue is whether the Crown proved tothe required standard that Mr Bublitz knew Viaduct (charges 10–12) and Hilltop(charge 13) were related parties of Mutual and therefore subject to those restrictionsbecause of the extended definition of control in the Mutual Crown guarantee.[103] We are acutely aware of the significant advantages a trial judge has in hearinga fraud case of this type over many weeks. The Supreme Court summarised thesein Sena.68 Despite our misgivings about the adequacy of the Judge's reasoning on thisissue, we have not been persuaded his conclusion was wrong. We briefly explain why.[104] At the time of the events giving rise to this prosecution, Mr Bublitz had over20 years' experience managing companies engaged in the property investment andfinance sectors. He co-founded Strategic Finance Ltd in 1999 and was initially itschief executive officer. Mr Bublitz was an executive director of that company until2006 by which time its loan book had grown to $400 million. Mr Bublitz had alreadyaccrued significant net worth from his various property investments through Hunter.Mr Bublitz was plainly a successful businessman and very experienced in the propertyand finance sectors.[105] There can be no doubt that Mr Bublitz was keenly attuned to related partyissues throughout the period of his involvement with both Viaduct and Mutual.68 Sena v Police, above n 62, at [40].Related party lending was a very topical issue with finance companies operating inthe property development sector at that time. Mr Bublitz well knew that restrictionson related party transactions were routinely included in debt security trust deeds forfinance companies and in the Crown guarantees provided to those companies inthe wake of the GFC. Mr Bublitz commissioned Mr McKay to investigate relatedparty issues at the time the purchase of a finance company was first mooted.Mr McKay examined the trust deeds for four prospective targets. He prepareda schedule summarising the relevant restrictions and ranking the respective definitionsof "related party" from "weak" to "strong". Mr McKay also produced a five-pagememorandum for Mr Bublitz and Mr Wevers on related party issues dated12 December 2008 setting out and commenting on the various definitions of"related party" commonly included in these instruments and in other applicablelegislation.[106] The Crown guarantee was Mutual's key attraction. Mr Bublitz would not haveacquired the company without it. It is inconceivable that Mr Bublitz would havecompleted the purchase without considering how the terms of the guarantee mightaffect his plans for the company post acquisition, just as he had done when consideringthe purchase of Viaduct.[107] Mr Bublitz's letter to Treasury dated 9 November 2009 refers to the relatedparty restrictions in the then current Mutual Crown guarantee, indicating he wasfamiliar with those. The agreement for sale and purchase of Mutual which wasprepared by Mr Bublitz's solicitors and signed by him specifically refers to this Crownguarantee dated 13 November 2008 as amended. The agreement was conditional onsatisfactory completion of due diligence by Argus Capital Ltd by the initial completiondate, being 11 December 2009. The due diligence items listed include the Crownguarantee and the Trust Deed. It is highly likely the Mutual Crown guarantee dated8 December 2009 would have been provided to Mr Bublitz and his solicitors prior tothem declaring the agreement unconditional and settling the purchase three days later,on 11 December 2009.[108] We note in passing that the definition of "control" in the original guaranteedated 13 November 2008 is substantially the same as in the replacement guaranteedated 8 December 2009. In both guarantees "control" means real or effective control,whether direct or indirect, and whether pursuant to a contract, an arrangement, anunderstanding or otherwise. The main difference is that "control" for the purposes ofthe 8 December 2009 guarantee extends to control "over a material part of [the relatedparty's] business or affairs" whereas the earlier instrument dated 13 November 2008refers only to control of the entity. This distinction is not material here becausethe Judge accepted the Crown's case that Mr Bublitz had real or effective control ofViaduct and Hilltop, not just a material part of their businesses.[109] Mr Bublitz must have known about the replacement guarantee shortly aftersettlement, if not before, because, in his capacity as a director of Mutual, he signeda memorandum of amendments to Mutual's prospectus dated 23 December 2009referring specifically to it. This memorandum, which pre-dated the transactions givingrise to charges 10–13, included the following statement:As at 8 December 2009 a new Crown Deed of Guarantee has been signed byMutual Finance and the Crown and the initial Crown Guarantee is to bewithdrawn. The coming into effect of the new Crown Guarantee andwithdrawal of the initial Crown Guarantee is to occur concurrently on1 January 2010.[110] Once it is accepted, as we do, that Mr Bublitz would have paid attention tothe extended definition of "control" in the Mutual Crown guarantee, he must haveappreciated that Viaduct and Mutual were related parties for the purposes ofthe guarantee given the extent of his control over Viaduct's affairs. The Judge gaveextensive reasons for finding that Mr Bublitz controlled Viaduct in terms of the MutualCrown guarantee and there is no challenge to this finding on appeal.69 The Judgeobserved there was "no evidence that any significant decision affecting Viaduct ona matter going to the governance of the company was made by Mr McKay orMr Wevers contrary to Mr Bublitz's wishes or without his involvement".70 The Judgewent so far as to say that "nothing was done contrary to Mr Bublitz's intentions".71Mr Bublitz obviously knew this.69 Verdicts judgment, above n 1, at [229]–[266].70 At [260].71 At [292].[111] There was considerable evidence to support the Judge's finding.Although the finding is not challenged, it is worth mentioning a little of the evidencethat supports it. Mr Bublitz's services to Viaduct were provided pursuant toa management services agreement dated 16 February 2009. This agreement providedthat Mr Bublitz was "responsible for all day-to-day activities" of Viaduct including,but not limited to, "managing an efficient and profitable business that meets its agreedtargets for growth, profitability and business activity". For these services, Mr Bublitzwas paid $240,000 plus GST per annum, the same as Mr Wevers received aschief executive officer. Mr Wevers and Mr Bublitz held weekly managementmeetings for Viaduct. The minutes of these meetings recorded Mr Wevers as"Chief Executive" and Mr Bublitz as "Managing Director". Consistent withMr Bublitz having overall control, he wrote to Mr Wevers on 26 January 2009 saying"Well Mr CEO I need you to get your whip out tomorrow & get this deal done" beforedetailing the tasks required for each staff member, including Mr Wevers, to complete.[112] While the Judge was not persuaded beyond reasonable doubt that Mr Bublitzcontrolled Viaduct in terms of the definition of "control" in the Viaduct Trust Deed,he was satisfied Mr Bublitz was able to exercise real and effective control in terms ofthe extended definition in the Mutual Crown guarantee. That Mr Bublitz was able todo so reflected the reality that Mr McKay allowed this to occur, possibly because ofhis conflicted position as Mr Bublitz's principal financial assistant throughoutthe relevant period. We are not persuaded the Judge was wrong to conclude thatMr Bublitz knowingly controlled Viaduct at this time.[113] We turn now to the question of Mr Bublitz's control of Hilltop, proof of whichwas required for charge 13. The Judge had no difficulty concluding that Mr Bublitzcontrolled Hilltop at the relevant time.72 Mr Bublitz does not challenge this findingon appeal.[114] Hilltop was incorporated on 25 May 2009. From then until his resignation on28 September 2009, Peter Mackie was its sole director and shareholder. Mr Mackiesaid he was surprised to learn of this suggested appointment and he was effectively72 At [269]–[271].'bulldozed' into the role by Mr Bublitz, Mr Wevers and Mr Chevin. Mr Mackie saidhe did not run the company and was "just a puppet".[115] When Mr Mackie resigned in September 2009, Mr Chevin introducedPeter Hill to Mr Bublitz. Mr Hill agreed to replace Mr Mackie on the understandinghis role would be short-term — "only perhaps 18 months tops". Mr Hill confirmedthat Mr Bublitz made all major financial decisions for Hilltop. He said Mr Bublitzdrafted the letter Mr Hill signed and sent to Mutual (for the attention of Mr Bublitz)on 9 June 2010 requesting it to exercise its power of appointment of a receiver toHilltop. For his part, Mr McKay regarded Mr Hill as a "puppet director shareholder".[116] We are satisfied the Judge was correct to find that Mr Bublitz controlled Hilltopat the relevant time and knew that he did so in terms of the extended definition ofcontrol in the Mutual Crown guarantee.Mr McKay[117] We are similarly not persuaded the Judge was wrong to conclude thatMr McKay was aware of the restrictions on related party lending in the Mutual Crownguarantee and must have known the relevant transactions breached those restrictions.[118] Mr McKay held a Bachelor of Commerce in Economics and a post-graduatediploma in financial economics. He was a former member of the Institute of Directorsand the Institute of Finance Professionals New Zealand. After qualifying, Mr McKayworked for one of the major banks before joining a share broking firm where hebecame involved in company valuations and investment analysis. Mr McKay workedfor two other share broking firms, including a period overseas, before founding hisown finance consulting company in New Zealand, Saffron Capital Ltd. His servicesto Hunter were provided through this company under a management servicesagreement dated 5 August 2005. A new management services agreement was enteredinto between Viaduct, Saffron and Mr McKay on 16 February 2009. This providedfor Mr McKay to fulfil the role of chief financial officer for Viaduct.[119] The evidence shows that Mr McKay carried out his work in a careful andcompetent manner. Ms Groom, who worked closely with Mr McKay, considered himto be "very professional", "quite particular" and "careful with documentation".[120] Mr McKay played an important role in the acquisition of both Viaduct andMutual and the subsequent administration of their operations. He took the leadthroughout in considering related party issues under the applicable Trust Deeds andCrown guarantees for Viaduct and Mutual. This was a central focus of his. He liaisedwith the external advisers who provided advice on related party issues prior tothe purchase of Viaduct. He sought advice from the same lawyers in late October 2009asking whether loan sales by Viaduct to another lender would create related partyissues for the purposes of the Crown guarantee. Mr McKay said this wasa coincidence and was unrelated to the proposed purchase of Mutual. However, thisdemonstrates his ongoing attention to related party issues at the time Mutual wasacquired. It is of some significance that the definition of "control" in the Crownguarantee considered in the October 2009 advice is in very similar terms to the MutualCrown guarantee. In both guarantees, control exists where a person "is able toexercise real or effective control, directly or indirectly, over [the other party] or overa material part of the business" of the other party. The lawyers emphasised that controlmust be real and effective, but it may be direct or indirect. Mr McKay must haveappreciated the breadth of the provision and its significance in the context ofthe proposed transactions between Viaduct and Mutual.[121] Mr McKay must have known from his close working relationship withMr Bublitz and his involvement in the day-to-day operations of all relevant entities,Viaduct, Mutual and Hunter, that Mr Bublitz was exercising effective overall controlby the time of the transactions giving rise to charges 10–12. We are not persuadedthe Judge was wrong to conclude Mr McKay knew these transactions were caught bythe extended definition of control in the Mutual Crown guarantee. He must have beenaware that the transactions breached the relevant restrictions (the value ofthe transaction or series or linked or related transactions exceeded one per cent ofTotal Tangible Assets of Mutual, the transactions were not on arm's length terms andthey had not been pre-certified by an independent expert approved by the Crown inwriting). Mr McKay, more than anyone, had a clear understanding of the exactfinancial position of the relevant entities, Hunter, Viaduct and Mutual, throughout thisperiod.Mr Blackwood[122] We see Mr Blackwood as being in a different category. Although he wasappointed a director of Viaduct following Mr Wevers' resignation, he was not paiddirector's fees. His day-to-day role as a lending originator for Viaduct, for which hewas paid only success fees, did not change. Mr Johnstone's closing submissions inthe High Court comprised 130 pages. On the topic of Mr Blackwood's allegedknowledge of the relevant restrictions in the Mutual Crown guarantee, Mr Johnstonesaid only this:Mr Blackwood would have been provided a copy of the updated guarantee inthe course of undertaking his due diligence of Mutual.[123] Mr Blackwood and Mr Macmillan carried out what Mr Kincaid described ascursory due diligence of Mutual's key loan files. Although he was a Crown witness,Mr Kincaid was not asked whether the due diligence extended beyond the loan filesto include the Mutual Crown guarantee. Mr McKay confirmed in his evidence thatthe due diligence undertaken by Mr Blackwood and Mr Macmillan involved a reviewof Mutual's loan files. Mr Johnstone was not able to refer us to any evidence showingthat Mr Blackwood received a copy of the Mutual Crown guarantee or that he wasaware of its terms from undertaking due diligence or otherwise.[124] By addressing globally whether the appellants knew the transactions breachedthe related party restrictions, the lack of evidence against Mr Blackwood on thesecritical issues was obscured. For the reasons we have given, the "actions" relied onby Mr Johnstone to support the Judge's findings are, in our assessment, insufficientto prove beyond reasonable doubt that Mr Blackwood knew the related partyrestrictions in the Mutual Crown guarantee applied to the transactions because ofthe extended definition of "control" and that he assisted the completion of thesetransactions knowing they breached those restrictions.[125] We are acutely conscious of the major advantage the trial Judge had in hearingthe evidence over several weeks and we hesitate before disagreeing with the factualfindings of the experienced Judge. However, we are not persuaded by the briefreasons he gave on this aspect of the case, namely that all knowledge elements wereproved to the requisite standard against Mr Blackwood. Although we set the relevantpassage out at [70] above, for ease of reference, we set it out again:[291] Bearing in mind the close working relationships, the roles ofMr McKay and Mr Blackwood in all of the steps taken to acquire the financecompany, and the extent to which each of them was involved in the operationof both Mutual and Viaduct after Mutual's acquisition, I am wholly satisfiedthat Mr McKay and Mr Blackwood were fully aware of the nature ofthe related party provisions in the Crown guarantee.(Emphasis added).[126] We do not disagree with the Judge's finding that Mr Blackwood knew ofMr Bublitz's central role at Mutual and Viaduct at all material times. However, as wehave attempted to demonstrate, there was a remarkable lack of evidence to show thatMr Blackwood was "fully aware of the nature of the related party provisions inthe Crown guarantee". It must be kept in mind that the Judge considered the Crownhad not proved Mr Bublitz controlled Viaduct for the purposes of the Viaduct TrustDeed. There was no particular change in the way Viaduct operated after Mr Bublitzpurchased Mutual. We cannot exclude the reasonable possibility that Mr Blackwoodwas not aware of the extended definition of "control" in the Mutual Crown guaranteewhich led to the Judge's conclusion that Mr McKay's presumptive control, asthe holder of 51 per cent of the shares in Phoenix, was displaced for the purposes ofthat guarantee.Were the statements about the Crown guarantee in Mutual's prospectusesmaterially false?[127] Charges 14 and 15 alleged that Mutual's prospectuses, the first dated 3 March2010 and the second an amended prospectus dated 28 April 2010, contained falsestatements which were intended to induce members of the public to subscribe forsecurities. The statements in the prospectus referring to the Mutual Crown guaranteewere said to be false because there was no disclosure of the alleged breaches foundingcharges 10–13 and the consequent risks of the guarantee being withdrawn at shortnotice.[128] The Judge found that the failure to disclose the breaches of the Mutual Crownguarantee was misleading in that these would have justified the Treasury inimmediately withdrawing the guarantee.73[129] Ms Reed submits the statement in the prospectus was not materially misleadingbecause the investors' funds remained secured by the Mutual Crown guaranteeregardless of whether Mutual was in breach of it during the currency of the prospectus.In our view, this is plainly correct. Unless and until the guarantee was withdrawn, allinvestments made in response to the prospectus, both principal and interest, wereunconditionally guaranteed by the Crown. In these circumstances, we cannot see howthe alleged non-disclosure was in any way material. Mr Johnstone responsiblyacknowledged the force of this analysis although he did not make any formalconcession.[130] It follows that the convictions against Mr Bublitz on charges 14 and 15 mustbe set aside.Did the Judge make the required finding of intent?[131] It is not strictly necessary for us to consider this second ground of appeal oncharges 14 and 15. However, for completeness, we briefly address it.[132] Ms Reed submits the Judge overlooked the need to find that in making the falsestatement Mr Bublitz intended to induce investors to invest. She focuses her criticismon the following paragraph of the judgment:74I have given careful consideration to the further proposition whichthe particulars of Charge 14 require also to be proved; namely, that Mr Bublitzknew that the failure to alert investors to the prospect that the Crown guaranteemight be removed because of the breaches of the related party provisions.It occurred to me that that might be too subtle a consideration to founda criminal charge. On reflection, however, I have decided that the enthusiasticreference by the directors to the "great deal of comfort" provided to investorsby the guarantee was misleading without being qualified by a reference tothe fact that related party transactions had been undertaken without approvaland in breach of the guarantee and that continuation of the guarantee was atrisk as a result. Having regard to Mr Bublitz's experience with the withdrawalof the Viaduct guarantee and the disastrous consequences for that company as73 At [312].74 At [313].a result, Mr Bublitz knew of the risk and was, at the very least, reckless in notdrawing it to the attention of investors.[133] While Ms Reed is correct that the Judge did not expressly find thatMr Bublitz's statement about the Crown guarantee in the prospectus was intended toinduce members of the public to invest, this appears not to have been contested andsuch a finding was inevitable. There can be no other explanation for includingreference to the Mutual Crown guarantee in the prospectuses; it was obviouslyintended to induce investment and would have done so. We can be confident the Judgedid not overlook this element of the charge because he identified it in his question trailas one of the four questions requiring the answer "yes" before he could find Mr Bublitzguilty on these charges.[134] The Judge found that Mr Bublitz was aware that the failure to disclose knownbreaches of the guarantee was misleading.75 This finding established thatthe statement was a "false statement" for the purposes of s 242(2)(a) ofthe Crimes Act:242 False statement by promoter; etc(2) In this section, false statement means any statement in respect ofwhich the person making or publishing the statement—(a) knows the statement is false in a material particular; or(b) is reckless as to whether the statement is false in a materialparticular.[135] The Judge's later reference to Mr Bublitz being reckless was likely directed tothe alternative definition of a false statement under s 242(2)(b). We say that becausethe fourth question posed by the Judge in his question trail asked whether Mr Bublitzknew the statement was false or was reckless as to that possibility. The reference inthe reasons to the issue of recklessness was unnecessary because the Judge's findingof actual knowledge that the statement was false was sufficient. That the Judge tooka belts and braces approach cannot be criticised and does not assist this aspect ofMr Bublitz's appeal.75 At [312].Were Mr McKay's fair trial rights breached?[136] This complaint is based on the procedure the Judge adopted for closingsubmissions. The Crown presented its written and oral closing submissions on 24 and25 October 2018. The case was then adjourned until 15 November 2018 for defenceclosings.[137] Counsel for Mr Bublitz presented his closing submissions on 15 November2018. The following day, the Judge issued a minute advising that he had prepared adraft question trail but it required revision. The Judge proposed to circulatethe question trail once modified and discuss it with counsel on 19 November 2018.To allow for this, the Judge deferred the commencement of closing addresses forMr McKay and Mr Blackwood until 21 November 2018.[138] As it transpired, the question trail was not circulated until 20 November 2018.In his accompanying minute the Judge observed:76[4] I have found the wording of some of the charges and the particularsambiguous and, in some cases, arguably duplicitous. Where severaltransactions forming the basis of one charge are alleged to have occurred overa period, it is necessary to consider whether separate charges ought to havebeen alleged, given that it is not permissible to allege a representative chargewhere the dates or specific instance of the offending can be ascertained.[5] I have endeavoured to identify the difficulties with the charges byposing the questions in each charge on an assumption which I accept may notreflect the charge as worded. That is because, in some instances it appearsthe Crown's propositions are not reflected in the wording of the relevantcharge.[139] The Judge discussed the question trail with Mr Johnstone in the presence ofother counsel the following morning, 21 November 2018. During these discussions,Mr Johnstone re-stated the Crown's position on several aspects of its case to assistthe Judge in finalising his question trail. Mr Johnstone also proposed minoramendments to some of the charges arising out of these discussions which concludedaround 11.30 am. The Judge adjourned until midday to allow time for defence counselto consider the matters discussed before responding. Counsel for Mr Bublitz andMr Blackwood then addressed the Court. The Court adjourned at 12.30 pm on76 R v Bublitz HC Auckland CRI-2014-004-2293, 20 November 2018 (Minute No 30).the basis that Mr Bradford would deliver his closing submissions for Mr McKaythe following morning.[140] At 5.15 pm that evening, the Crown circulated its suggested changes tothe question trail and the Crown charge notice. The transcript of the discussions withcounsel that day was provided to counsel at 7.30 pm.[141] The Judge allowed the amendments the following morning. Mr Bradfordapplied for an adjournment to allow more time for him to consider whether there wasany prejudice to Mr McKay arising from the amendments before delivering his closingaddress. This application was declined.77 Mr Bradford accordingly delivered hisclosing address for Mr McKay in writing on 22 November 2018. He did so withoutreferring to the amended charge notice or the question trail. He explained that thiswas because he did not have enough time to modify his closing address.[142] Given the history of the proceeding, Mr Bradford submits the Judge ought tohave entered acquittals on 20 November 2018 if he was of the view the Crownpropositions in closing were not in accordance with the wording of the charges.Mr Bradford submits that the "deprivation of time and facility" to consider andrespond to the "changed landscape" caused a miscarriage of justice and the appropriateresponse would be to set aside the convictions.[143] We are not persuaded by Mr Bradford's submissions. The amendments tothe charges were minor and did not alter in any material way the substance ofthe allegations. Other defence counsel took no issue with the amendments. It is tellingthat even now, many months later, Mr Bradford has still not been able to identify anyprejudice to Mr McKay arising from these minor amendments. We cannot see howthey would have had any effect on the submissions Mr Bradford presented whichexplained in considerable detail the substance of Mr McKay's defence.77 R v Bublitz HC Auckland CRI-2014-004-2293, 22 November 2018 (Minute No 31).Conclusion on conviction appeals[144] For the reasons given, Mr Bublitz's appeal against conviction on charges 10–13 must be dismissed but allowed on charges 14 and 15. Mr McKay's appeal againstconviction on charges 10–12 must be dismissed. Mr Blackwood's appeal againstconviction on charges 10–13 must be allowed.Mr Bublitz's sentence appealSentencing judgment[145] In assessing the scale of the offending on charges 10–13, the Judge acceptedthe Crown's submission that it would be appropriate to take account of all transactionsinvolving the same parties, not just those the subject of the charges:78[The Crown] submits that in all, across 16 transactions, Mutual purchased$3,923,365 in Viaduct Loans, and advanced a combined sum of $243,444.61to Homebush and Hilltop on the basis of six separate credit submissions.It also advanced $230,000 to NKE, another Hunter entity, on 26 March 2010,a loan which Viaduct purchased from Mutual on 28 April 2010. I accept Mr Johnstone's submission that while not all of the amounts justmentioned were essential to the verdicts on charges 10 to 13, it is appropriatethat they be taken into account on sentencing as being relevant facts disclosedby the evidence at trial.(Footnotes omitted).[146] Although charges 1–9 were dismissed, the Judge considered it "unrealistic toignore" the steps taken by the appellants from January 2009 to implement a plan ofconcealment of Mr Bublitz's interests from the trustee for the Viaduct debentureholders, Treasury officials and Viaduct's investors.79 So, although the offendingoccurred over a relatively short period between 25 January 2010 and 4 June 2010,the Judge considered this was the almost inevitable consequence of a predeterminedplan:80It follows, therefore, that I accept Mr Johnstone's proposition that betweenJanuary and December 2009 your conduct involved operating "at the marginsof legality" and that sailing so close to the wind meant that it was almost78 Sentencing judgment, above n 9, at [28]–[29].79 At [40]–[42].80 At [45] and [54].inevitable that, as the Hunter Group's prospects deteriorated, you wouldinevitably cross the line into criminality.Although the offences for which you have been convicted occurred only inthe space of just over three months, the deceptive and misleading activitywhich led to your convictions covered more than a year.[147] As to the scale of the offending, the Judge accepted the Crown's calculationsof the amounts involved in the charged transactions:81(a) Charges 10–12 — Mutual purchased $3.9 million in loans fromViaduct.(b) Charge 13 — Mutual lent $208,444.61 to Hilltop.(c) Charges 14 and 15 — investors subscribed for secured debenture stockof the order of $4.88 million in response to the prospectuses.[148] The Judge also took into account that the Crown had paid out in excess of$9 million under the guarantee of which approximately $3.38 million remainedunrecovered at the time of sentencing.82[149] After considering comparable authorities, the Judge adopted a starting point offour years and six months' imprisonment for Mr Bublitz on charges 10–13.83The Judge applied an uplift of nine months' imprisonment to take account ofthe prospectus charges to give an overall starting point of five years and three months'imprisonment.84 The Judge then allowed a discount of 30 per cent from that startingpoint to allow for the "significant punitive element in the way in which this criminalprosecution has been undertaken".85 This discount equated to approximately19 months. The Judge allowed a further discount of 10 per cent from the starting point,six months, to recognise Mr Bublitz's previous good character, remorse and his81 At [53].82 At [52].83 At [78].84 At [78].85 At [93].cooperation in the efficient running of the trial.86 This yielded an end sentence of threeyears and two months' imprisonment.Was the starting point for charges 10–13 too high?[150] We accept Ms Reed's submission that the Judge ought not to have takenaccount of transactions that were not the subject of charges. We also considerthe Judge overstated the period of the offending by taking account of conduct fromJanuary to December 2009 which he regarded as being "at the margins of legality".As the Judge himself observed in his Verdicts judgment, there was nothing inherentlyunlawful or improper in Mr Bublitz's plan to acquire a finance company forthe intended purposes.87 Mr Bublitz was sentenced for theft arising out of transactionsin 2010, not for activity in 2009 which was not proved to be illegal and in respect ofwhich Mr Bublitz retains the presumption of innocence. The amount paid bythe Crown in response to its guarantee also overstates the scale of the offendingbecause this exposure was not even confined to the period of Mr Bublitz's ownershipof Mutual, let alone to the thefts he was convicted of. Mr McKay calculated that totaladvances made to entities linked to Hunter represented 28 per cent of total advances.The Judge appears to have accepted this evidence.88[151] The thefts occurred over a four-month period and involved a total ofapproximately $1.17 million:(a) Charge 10 — Homebush loan purchase in two tranches — $495,000and a further $35,000.89(b) Charge 11 — Northgate loan of $235,000.90(c) Charge 12 — Hilltop loan purchase of $200,000.9186 At [101].87 Verdicts judgment, above n 1, at [213].88 At [213].89 Sentencing judgment, above n 9, at [24].90 At [25].91 At [26].(d) Charge 13 — direct loan to Hilltop of $204,444.61.92[152] Of this total, $273,000 was repaid by Homebush and $37,000 by Hilltop.The loss was therefore approximately $860,000.[153] We do not see Mr Bublitz's offending as comparable to some of the casesthe Judge relied on in setting the starting point. In Tallentire v R, this Court uphelda starting point of six years' imprisonment for Mr Tallentire93 and eight and a halfyears' imprisonment for Mr Douglas and Mr Nicholls.94 However, the offending inthat case was described by this Court as "theft on a grand scale", involving$19.76 million in the case of Messrs Nicholls and Douglas and $12.1 million inthe case of Mr Tallentire.95 The offending, described as premeditated andsophisticated, was motivated purely by greed. Mr Nicholls and Mr Douglas benefittedconsiderably. Both received substantial cash distributions and Mr Nicholls acquireda valuable beach property at Omaha without paying for it. Mr Tallentire alsobenefitted by obtaining access to funds to acquire the finance company fromMr Nicholls and Mr Douglas along with another company based in Australia.[154] The offending in Ludlow v R was also of a different order of magnitude.96This Court described Mr Ludlow's offending as "significant commercial fraud".97The amount involved in these thefts was $3.7 million causing a net loss ofapproximately $2.9 million. The offending was premeditated, occurred over a periodof 19 months and was motivated by greed.98 Mr Ludlow and his family gainedsignificant benefits, including the purchase of four recreational villas in Fiji.This Court upheld a starting point of six and a half years' imprisonment adopted inthe District Court for six theft charges by a person in a special relationship under s 220of the Crimes Act.92 At [27].93 Tallentire v R, above n 61, at [151] and [185].94 At [149] and [185].95 At [180].96 Ludlow v R [2013] NZCA 196.97 At [1].98 At [7].[155] The decision of this Court in Hamilton v R was also referenced.99 This Courtupheld a starting point of five years' imprisonment for 14 charges of theft under s 220of the Crimes Act. Mr Hamilton was a solicitor who assisted the principal of a financecompany to structure his affairs in order to conceal his control of related entities whichhe funded over a three-year period using the finance company's funds in breach ofthe debenture trust deed. Mr Hamilton also assisted the principal by drafting andexecuting loan documents which he knew were in breach of the trust deed. The financecompany collapsed causing loss to investors of approximately $12.5 million.[156] Like the Judge, we regard Mr Bublitz's culpability as being at a lower levelthan the offending in these cases. It is more comparable, although more serious thanin the other cases the Judge referred to, R v Cropp and R v Sullivan.100[157] Mr Cropp was the chief executive officer of the Dominion Finance Group ofcompanies. His offending arose out of four related party transactions in a one-monthperiod causing losses of approximately $9 million. Mr Cropp's offending occurred aspart of an attempt to keep the business afloat. He did not gain personally. Lang Jadopted a starting point of three years and four months' imprisonment for thisoffending.[158] Heath J adopted a similar starting point of three years and six months'imprisonment for Mr Sullivan for his deliberate and dishonest failure to discloserelated party transactions connected with South Canterbury Finance causing losses ofthe order of $7 million. Mr Sullivan did not gain personally. The Judge found thathis offending was motivated by a misguided sense of loyalty to Mr Hubbard.[159] Having regard to these cases, we consider that an appropriate starting point forMr Bublitz should have been no more than four years' imprisonment. Mr Bublitz'soffending was partly motivated by the prospect of personal gain. However, he did notbenefit. Rather, as the Judge accepted, he lost well over $2 million of his own moneyattempting to "rescue the situation".101 We differ from the Judge only to the extent he99 Hamilton v R [2015] NZCA 28.100 R v Cropp [2013] NZHC 1193; and R v Sullivan [2014] NZHC 3201.101 Sentencing judgment, above n 9, at [71(c)].took account of Mr Bublitz's conduct in 2009 that was not found to be unlawful andhe overstated the losses. We consider the starting point should be reduced bysix months to account for this.[160] Ms Reed also submits the starting point of four years and six months'imprisonment on charges 10–13 adopted for Mr Bublitz cannot be justified as havingreasonable parity with those of his co-offenders. Mr McKay, who the Judge describedas "the principal architect of the scheme",102 was convicted of charges 10–12, forwhich a starting point of three years and three months' imprisonment was adoptedyielding an end sentence of 12 months' home detention.103 In Mr Blackwood's case,who was similarly convicted of charges 10–12, a starting point of two years and ninemonths' imprisonment was adopted leading to an end sentence of nine months' homedetention.104 Mr Chevin pleaded guilty to nine representative charges. A starting pointof two years and nine months was adopted by Woolford J leading to an end sentenceof nine months' home detention.105[161] We consider there is some force in Ms Reed's parity complaint. The Judgedescribed Mr McKay's culpability as being only "somewhat lower" thanMr Bublitz.106 We agree with that assessment. Both stood to benefit. Neither did.Unlike Mr McKay who the Judge found was the principal architect of the scheme andlost nothing, Mr Bublitz lost well over $2 million of his own money. We considerthe disparity — more than one third — between the starting point of four years andsix months' imprisonment adopted for Mr Bublitz and three years and three months'imprisonment for Mr McKay is hard to justify.[162] For all these reasons, we conclude the appropriate starting point for Mr Bublitzshould have been no higher than four years' imprisonment.102 At [47].103 At [79] and [108].104 At [80] and [109].105 R v Chevin [2017] NZHC 285 at [39].106 Sentencing judgment, above n 9, at [47].Uplift for other offending[163] It follows from our conclusion on the conviction appeals relating to charges 14and 15 that the uplift of nine months for this offending cannot now be applied.Discount for delay[164] We consider the discount allowed by the Judge for delay, effectively19 months, was appropriate. However, we disagree that it should be calculated as apercentage. To illustrate the point, Mr Bublitz's starting point would have beenconsiderably greater had he been convicted of all 15 charges. It would have beengreater again if he had been convicted of all 49 charges he originally faced.If the discount for delay is calculated as a percentage, the allowance would varyconsiderably depending on the number of convictions. Equally, if Mr Bublitz had beenconvicted of only one charge, he would receive little credit for the consequences ofthe delay if this is calculated as a percentage of the starting point. The consequencesof the delay for Mr Bublitz are the same in each of these examples. He spentnine months of his life and over $1 million of his own money in a High Court trial thathad to be aborted due entirely to failings for which the Crown must take soleresponsibility. He has suffered considerably in consequence of this. We can see noprincipled basis for calculating the allowance as a percentage of the eventualsentencing starting point. The remedy is for the breach of Mr Bublitz's right to betried without undue delay and this has no necessary correlation to the starting pointadopted at sentencing to reflect his culpability for the offending.[165] For these reasons, we make no adjustment to the allowance afforded bythe Judge of 19 months' imprisonment.Conclusion on sentence appeal[166] Mr Bublitz's appeal against sentence must be allowed. The adjusted startingpoint on charges 10–13 is four years' imprisonment. From that, 19 months must bededucted for delay and a further five months (10 per cent) for the personal mitigatingfactors the Judge took into account. This yields an end sentence of 24 months'imprisonment, making home detention an option. We consider such a sentence wouldbe the least restrictive sentence appropriate in the circumstances in terms of s 8(g) ofthe Sentencing Act 2002. Mr Bublitz has been a serving prisoner since 28 May 2019,approximately two and a half months. Taking that into account, the end sentencewould reduce to approximately 21 and a half months' imprisonment. Taking intoaccount the time he has served, we consider it is appropriate to substitute a sentenceof 11 months' home detention.Result[167] Mr Bublitz's appeal against conviction is allowed in part. The convictions oncharges 14 and 15 are set aside. We direct that a judgment of acquittal be entered onthose charges. Mr Bublitz's appeal against conviction on charges 10–13 is dismissed.[168] Mr Bublitz's appeal against sentence is allowed. His sentence of three yearsand two months' imprisonment is set aside and a sentence of 11 months'home detention is substituted on each of charges 10–13 to be served concurrently.This sentence is to commence immediately upon release. Following his release,Mr Bublitz is to travel directly to the address stated in the memorandum dated 9 July2019 from the Department of Corrections and await the arrival of a security officer.Mr Bubltiz is to comply with the special conditions set out in that memorandum.[169] Mr McKay's appeal against conviction is dismissed.[170] Mr Blackwood's appeal against conviction is allowed. The convictions oncharges 10–13 are set aside. We direct that a judgment of acquittal be entered on thosecharges.Solicitors:Beca & Co, Auckland for BublitzClaymore Partners Ltd, Auckland for BlackwoodCrown Solicitor's Office, Auckland for Respondent