Belgrave lawyer knew work unlawful, court told

Hugh Hamilton is accused of giving advice in unlawful advances and helping conceal the identity of Belgrave Finance's true owner. Photo / Sarah Ivey
Hugh Hamilton is accused of giving advice in unlawful advances and helping conceal the identity of Belgrave Finance's true owner. Photo / Sarah Ivey

Belgrave Finance's former legal adviser knew he was acting unlawfully when he allegedly conspired with a former property developer to help hide the man's links to the now failed firm, the Crown argued this morning.

Former Central Hawkes Bay mayor and Waipukurau lawyer, Hugh Edward Staples Hamilton, is on trial in the High Court at Auckland for allegedly helping former property developer Raymond Schofield arrange the purchase Belgrave Finance so that his identity and control of the company was hidden.

The purpose of this was to allegedly allow Schofield, who bought Belgrave in 2005 for $3 million, to borrow from the firm either directly or through other companies he controlled.

Over a two-year period after the purchase, Belgrave allegedly loaned $18 million to Schofield or entities controlled by him. Of this amount, Hamilton allegedly assisted on related-party loans worth $12.6 million, preparing documents and advising Belgrave on "these unlawful advances".

Because Hamilton was instrumental in helping with the transactions and knew they breached Belgrave's trust deed, he was liable for charges of theft by a person in a special relationship, Crown lawyer Nick Williams argued yesterday in his opening statements to the court.

Continuing his opening address this morning, Williams said a key issue in the trial would be Hamilton's "state of mind" and his credibility.

For the theft charges that Hamilton faces, Williams said the issue was whether the former mayor "intentionally assisted Mr Schofield and Belgrave's directors to use investor funds in contravention of the trust deed".

A trust deed dictates the terms and conditions between debenture holders (investors) and the company accepting the funds.

Loans from the company to Schofield allegedly breached restrictions on related-party advances in this deed, which were not disclosed to the company's investors.

These investors were owed $20.5 million when the company collapsed in 2008.

Williams anticipated Hamilton's defence was that he was "merely acting on instructions" when helping with the loans and that Schofield was named a beneficiary of a trust that owned Belgrave because of a "drafting error" that was a "honest mistake".

The competing contentions, Williams said, are whether Hamilton was a negligent but honest lawyer or if he intentionally helped others breach their known legal obligations.

Williams said that of because of the defendant's experience of almost 40 years as a lawyer, "there is an overwhelmingly influence that Mr Hamilton must have appreciated the significance of his actions".

"And at the very least he was wilfully blind".

"He knew that Mr Schofield was connected to Belgrave in substance, even if he took comfort in the erroneous understanding that Mr Schofield was not related to Belgrave on paper," the Crown lawyer said.

"The Crown case is that Mr Hamilton had actual knowledge of the unlawfulness of his actions, as he formed a common unlawful intention with his co-offenders," Williams said.

Belgrave's directors Stephen Smith and Shane Buckley pleaded guilty to charges similar to those faced by Hamilton and were sentenced to four years and three years in jail respectively. Both are due to appear as witnesses in the Crown's case against Hamilton.

Schofield was also charged in the High Court case, brought by the Serious Fraud Office and the Financial Markets Authority's Fraud Office, but was granted a stay on the proceedings in December 2012 because he is terminally ill.

Williams is expected to finish his opening today and Hamilton's lawyer, John Robertson, is then set to give an opening statement for the defence.

The trial, before Justice John Faire, is set down for eight weeks.

- NZ Herald

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