The Serious Fraud Office has lost the first round in it its bid to appeal a ruling clearing Capital + Merchant Finance directors Wayne Douglas and Neal Nicholls over the so-called 'Hub loans'.

In the High Court in Auckland, Justice Edwin Wylie turned down the Crown's application for the judge to revisit three questions of law surrounding the Palmerston North property transactions involving some $14.4 million of investor funds, according to a judgment published today.

The Crown wanted Justice Wylie to review whether he had erred in his judgment in the first of two trials of the Capital + Merchant duo that cleared them of wrongdoing in those transactions, which the Crown would then use in its application to the Court of Appeal.

The judge backed his acquittals, saying the Crown hadn't proved beyond reasonable doubt the trust deed had been breached or that accounting standards had been broken and that it wasn't appropriate for him to state an opinion for the Court of Appeal.


Justice Wylie wasn't swayed by the Crown's submissions that his findings could affect other SFO cases, which isn't a factor he takes into account.

"I simply concluded that on the materials before me, the Crown had failed to prove its case beyond reasonable doubt," the judgment said. "It is difficult to see how this finding could materially impact on other prosecutions."

Douglas and Nicholls were convicted and jailed for fraud in the second of the Capital + Merchant trials, as was former chief executive Owen Tallentire. The second trial related to some $28 million of transactions.