The
Court of Appeal overturned convictions entered against Glenda Mary Wynyard for
alleged fraud in attempting to stem a 2009 cashflow crisis in her advertising
agency, Media Counsel Ltd.
Media Counsel is in liquidation. The liquidators’ report states that a lack of
working capital and excessive drawings taken by Ms Wynyard contributed to the
company’s failure. Double pledging of
invoices by Media Counsel led to a Serious Fraud Office investigation and to charges
laid under the Crimes Act. The Court of
Appeal ruled seven of the Crimes Act convictions could not be sustained;
Wynyard could not be guilty of fraud in directing that billings be paid to the
Marac Finance since Marac was entitled to receive payment.
The court was told Media Counsel’s
business grew rapidly from inception with billings of $4.2 million in 2007
reaching $33.9 million in 2009. The
profit margin on billings is slim.
Agencies must pay for advertisements on placement, unless accredited
with the Print Media Accreditation Authority.
Terms for accredited agencies is payment on the last day of the month
following publication. Media Counsel
gained accreditation in November 2008.
Prior to that, the company used a “place-through” agreement with
accreditated agency Aegis, paying a fee to place advertisements through Aegis
and to get the benefit of extended credit terms.
Evidence was given that Media Counsel
negotiated a three million dollar credit line with Marac Finance after gaining
its own accreditation. Marac purchased selected
client billings, immediately paying Media Counsel 80 per cent of the invoice face
value. The client was then instructed to
pay Marac. On receiving payment, Marac
paid the 20 per cent balance due to Media Counsel, less fees and an interest
charge.
A severe cash crisis struck in 2009. Media Counsel lost its accreditation. The “place-through” agreement with Aegis was
reinstated. This resulted in Aegis (apparently
unaware of the existing financing arrangement with Marac) instructing Media
Counsel clients to pay it direct, while Marac was expecting to receive these
same payments. Marac had registered its
financing agreement on the personal property securities register. Aegis is deemed to have notice of Marac’s
rights to collect the invoices. Marac,
with Wynyard’s assistance, acted promptly to collect payment on its pledged
invoices, leaving Aegis out of pocket.
At a Serious Fraud Office interview, Wynyard said she was desperate to
prevent Marac from putting her company into liquidation and wanted to see Marac
paid since she had guaranteed the Marac debt.
The Court of Appeal ruled that Wynyard’s
convictions on seven of the counts could not stand. Ensuring that pledged client billings were
paid to Marac, the rightful recipient, was not fraud. She had not honoured promises to Aegis that
it could collect the same invoices, but that was not a crime she had been
charged with.
At trial, Wynyard was sentenced to eight
months home detention. She has been on
bail pending appeals. The Court of Appeal
said bail is to continue while sentencing is reconsidered in respect of four
other convictions not appealed.
Wynyard
v. R – Court of Appeal (17.12.15)
16.024