A ruling on the appeal of three Capital + Merchant directors against their sentences and convictions, which could have implications for other cases, is expected out this week.

Wayne Douglas and Neal Nicholls, the founding directors and beneficial owners of failed finance company Capital + Merchant, were found guilty of three charges of theft by a person in a special relationships in July.

The High Court's Justice Ed Wylie said the pair loaned investor money for their own benefit in ways that breached Capital + Merchant's trust deed.

Nicholls and Douglas, both in their 50s, were in August handed down 7.5 years in jail each - the longest sentences given to failed finance companies bosses to date.


Former C+M director and chief executive Owen Tallentire, who is in his mid-60s, was also found guilty of two charges in this case and sentenced to five years in jail.

During the trio's trial, counsel for the defendants argued the proceedings were very different to other cases where these sorts of charges were involved.

Douglas and Nicholls' Queen Counsel Bruce Gray said previous cases with these charges had involved the concealment of transactions and that was not a feature of this trial.

Tallentire's lawyer, Nathan Gedye, went as far as to say that the Crown had "overcharged" by bringing the case in the way it did.

Justice Wylie rejected this, but did note circumstances of the trial were "unique" and that it involved "unusual and untested features".

Following sentencing the defence brought the case to the Court of Appeal, where it was argued last month before Justices Terence Arnold, Lynton Stevens and Rhys Harrison.

A decision is expected to be released by the court this week, and the Herald understands it is being keenly anticipated in legal circles and could impact how future cases are argued.

While the defence appealed the conviction and sentence of the trio, Crown prosecutors also hoped to appeal not guilty verdicts of a separate trial that Douglas and Nicholls were involved in.


The pair were found not guilty in July on one charge of theft by a person in a special relationship and two of making false statements in a prospectus.

This case, brought by the Serious Fraud Office, concerns loans of about $14.5 million made to four companies that converted two Palmerston North office blocks into student accommodation - a project called "the Hub".

While the pair were acquitted, the Crown pushed for Justice Wylie to refer questions of law onto the Court of Appeal.

On Friday the judge declined the Crown's application, which could have seen the Court of Appeal order a retrial if it deemed it appropriate.