Crown says Hugh Hamilton knew actions illegal

Former Central Hawke's Bay mayor and Waipukurau lawyer Hugh Hamilton in the dock at the High Court, Auckland.

Belgrave Finance's former legal adviser knew he was acting unlawfully when he conspired with a former property developer to help hide the man's connections to the now failed firm, the Crown alleged yesterday.

Former Central Hawke's Bay mayor and Waipukurau lawyer, Hugh Edward Staples Hamilton, is on trial in the High Court at Auckland for helping a former property developer, Raymond Schofield, to arrange the purchase of the company Belgrave Finance so that his identity and control of the company was hidden. The purpose was to 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 loaned $18 million to Schofield or entities controlled by him.

Of this amount, Hamilton 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 said in his opening statements to the court.

Mr 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, Mr 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 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.

Mr Williams said the Crown anticipated that 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, Mr Williams told the court, are whether Hamilton was a negligent-but-honest lawyer, or if he intentionally helped others breach their known legal obligations.

Mr 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," Mr Williams said.

"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," Mr Williams said.

Hamilton's lawyer, John Robertson, is set to give an opening statement for the defence.

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