A central issue in the trial of a former North Island mayor who allegedly conspired with a former property developer to hide that man's identity in the purchase of a now-failed finance company will be the accused's "state of mind", the High Court heard yesterday.
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 of Belgrave Finance so that Schofield's 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", the Crown said.
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, the Crown has argued.
Continuing with his opening address yesterday morning, Crown lawyer Nick Williams said a key issue in the trial would be Hamilton's "state of mind".
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 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," 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.
But Hamilton's lawyer, John Robertson, denied this was the case during his opening address to Justice John Faire.
"Mr Hamilton categorically denies that in his role as solicitor for Mr Schofield or in any other role he helped form a common plan with Mr Schofield and others in order for Mr Schofield to solicit funds from the public in contravention of the [Belgrave's] trust deed," he said.
"When it comes to the question of whether he knowingly was involved in related-party lending or misleading the public the defence says he is innocent," Robertson said.
The defence lawyer said it was an "understatement" to call the evidence in the case complicated.
"The Crown's case is all about hindsight, of what Mr Hamilton should have known about what Mr Schofield intended to do.
"But what the evidence will show is that no one really knew what Mr Schofield was up to including the people who knew him best," he said.
Robertson said Hamilton had no responsibility to monitor the decisions of Belgrave's directors, who both pleaded guilty to charges similar to what the defendant is facing and were sentenced to jail.
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.
Hamilton's trial, set down to take eight weeks, continues today.