Banks v R
[2016] NZHC 1596
•14 July 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2016-404-000088 [2016] NZHC 1596
UNDER THE Costs in Criminal Cases Act 1967 BETWEEN
JOHN ARCHIBALD BANKS Applicant
AND
THE QUEEN Respondent
Hearing: 7 July 2016 Appearances:
D P H Jones QC for the Applicant
J R Billington QC and M Wong for the RespondentJudgment:
14 July 2016
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie on 14 July 2016 at 2.00pm
Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
D P H Jones QC/Parlane Law, Auckland
J R Billington QC, Auckland/Crown Law, Wellington
BANKS v THE QUEEN [2016] NZHC 1596 [14 July 2016]
Introduction
[1] The applicant, Mr John Banks, seeks the costs of his defence, in relation to criminal proceedings brought against him by the Crown, from 3 December 2013 (being the date of a judgment by Heath J dismissing an application for review1) to 1
August 2014, when he was sentenced by me.2 Mr Banks seeks payment of
indemnity costs ($190,210) or, in the alternative, costs in such sum, in excess of the scale of costs prescribed by the Costs in Criminal Cases Act 1967, as the Court considers just and reasonable.
[2] The application is opposed by the Crown.
[3] Mr Banks filed an affidavit. So did Mr Michael Heron QC, who, at all relevant times, was the Solicitor-General and the Chief Executive Officer of the Crown Law Office. Neither Mr Banks nor Mr Heron were called for cross examination. Rather the hearing before me was confined to the presentation of submissions.
[4] The key issues were:
(a) should Mr Banks receive an award of costs, following on from his acquittal?; and
(b)if Mr Banks should receive an award of costs, what should be awarded?
Factual Background
[5] Mr Banks was a candidate in the 2010 Auckland mayoral election. In the course of his electoral campaign he raised substantial funds to assist in meeting the costs involved. Ultimately his campaign was unsuccessful. Nevertheless, as a candidate in a local election, Mr Banks was required to file a return of electoral expenses.3
[6] A return was prepared on Mr Banks’ behalf. He signed it and it was filed on
9 December 2010.
1 Banks v Auckland District Court [2013] NZHC 3221, [2014] NZAR 591; See below at [21].
2 R v Banks [2014] NZHC 1807; See below at [26].
3 Local Electoral Act 2001, s 109.
[7] Pursuant to the legislation then in force, the candidate was required to disclose in the return any electoral donation of more than $1,000 made by a single donor. Further, the donor’s name and address had to be disclosed, unless the donor made the donation anonymously. A donation was made anonymously if it was made in such a way that the candidate did not know who made it.4
[8] The return signed by Mr Banks disclosed many donations, including a number of donations of $15,000. Many of these were recorded as being anonymous. It also disclosed five donations of $25,000. All were recorded as being anonymous. None of the disclosed donations were attributed to Skycity Management Ltd (“Sky City”) or to Megastuff Ltd (“Megastuff”).
[9] Pursuant to the legislation then in force, it was an offence to transmit a return of expenses knowing it to be false in any material particular.5
[10] Sometime after Mr Banks filed the return, it emerged that $15,000 had been donated to his campaign by Sky City and that two donations – each of $25,000 – had been made by Megastuff on behalf of Mr Kim Dotcom. It was alleged that Mr Banks knew who made these donations, but that they had been declared in the return as being anonymous.
[11] A police investigation was commenced in May 2012. The investigation centred on whether the donations made to Mr Banks’ campaign by Sky City and Megastuff had been accurately recorded in the return and, if not, whether Mr Banks had filed the return knowing it to be false. Mr Banks was interviewed twice as part of the investigation. A witness statement was taken from Mr Banks’ wife, Amanda Banks. Witness statements were also taken from a number of others including Mr Dotcom, his then wife, Mona Dotcom, and his then security advisor, Mr Wayne Tempero.
[12] The police investigation concluded in July 2012. The investigating officer recommended that no prosecution should proceed. This recommendation was
4 Section 109.
5 Section 134(1).
accepted, with the police taking the view that there was insufficient evidence to charge Mr Banks.6
[13] A private prosecution was then initiated by Mr Graham McCready. He swore an information against Mr Banks.
[14] In November 2012, Judge I G Mill, in the District Court at Wellington, found, on the basis of the material obtained by the police in the course of their investigation, that there was a sufficient case to be tested in Court.7 He directed that a summons should issue.
[15] It later transpired that the first information was defective and a second information was then laid by Mr McCready. In April 2013, Judge Mill again concluded that there was substance to Mr McCready’s allegation and he issued a fresh summons against Mr Banks.8 This summons was served on Mr Banks in May
2013.
[16] Mr McCready had earlier written to the Solicitor-General asking him to intervene in the prosecution. In June 2013, the Solicitor-General advised Mr McCready that, at that stage, he considered it inappropriate to intervene, but that he would re-assess the matter if Mr Banks was committed.
[17] Mr Banks applied for a discharge under the then applicable provision – s 347 of the Crimes Act 1961 – on the basis that the prosecutor was unable to prove that he filed the return knowing it to be false.
[18] Mr McCready applied for oral evidence orders in respect of various prospective witnesses. Mr McCready’s application was heard by Judge E P Paul in the District Court at Auckland in September 2013. It was largely successful. In the
course of his decision Judge Paul noted that, if the witnesses gave evidence
6 A subsequent review by the Independent Police Conduct Authority concluded that the police’s decision was based on too narrow a view of the knowledge element required by s 134(1) of the Local Electoral Act – see David Carruthers Police investigation into complaints about John Banks’ return of expenses and donations at the conclusion of the 2010 Auckland Super City Mayoral election (Independent Police Conduct Authority, 28 May 2015)..
7 McCready v Banks [2014] DCR 138 (DC).
8 McCready v Banks DC Wellington CRI-2012-085-9093 and CRI-2012-085-7894, 16 April 2013.
consistent with their written statements, there would be a prima facie case against Mr
Banks.9
[19] The evidence was adduced by Mr McCready before Judge J P Gittos in October 2013. Judge Gittos concluded that sufficient evidence had been presented to justify Mr Banks’ committal and that the evidence was such that a reasonable tribunal could convict Mr Banks on it. He committed Mr Banks for trial.10
[20] Following committal, the Solicitor-General took over the conduct of the prosecution. He did so at Mr McCready’s request, and with Mr Banks’ consent. The then Crown Solicitor in Auckland knew Mr Banks personally. Another partner in the Auckland legal firm holding the Crown warrant was leading an extradition case against Mr Dotcom, who was a key Crown witness in the case against Mr Banks. As a result, and also because Mr Banks was then a Minister of the Crown, Mr Paul Dacre QC was appointed to prosecute the case. He was independent of any of the parties and of prospective Crown witnesses.
[21] Mr Banks applied for judicial review of the committal decision. This application was heard by Heath J. He dismissed it on 3 December 2013,11 and the proceedings were transferred to this Court for hearing.12
[22] Mr Banks’ application for a discharge under s 347 of the Crimes Act was heard by me on 4 April 2014. I dismissed it.13
[23] The matter proceeded to trial on 19-29 May 2014, again before me, sitting as a Judge alone.
[24] Mr Banks faced a single charge alleging that he had breached s 134(1) of the
Local Electoral Act. The indictment read as follows:
The Solicitor-General charges that John Archibald Banks on or about the 9th
day of December 2010 at Auckland, being a candidate, transmitted a return
9 McCready v Banks DC Auckland CRN 12085501798, 6 September 2013 at [14].
10 New Zealand Private Prosecution Service Ltd v Banks DC Auckland CRN 120 8550 1798, 16
October 2013. [By this stage the private prosecution commenced by Mr McCready had been taken over by a company formed by him – New Zealand Private Prosecution Service Ltd].
11 Banks v Auckland District Court, above n 1.
12 R v Banks [2013] NZHC 3223.
of electoral expenses knowing it to be false in one or more material particulars.
Particulars: The return of electoral expenses and donations for the 2010
Auckland mayoral election signed by the said John Archibald Banks listed as
“anonymous” the following donations and in respect of which he knew the
identity of the donor:
a) Donation in the sum of $15,000 made by Skycity Management Ltd and received on or about 24 May 2010;
b) Donation in the sum of $25,000 made by Megastuff Ltd on behalf of
Kim Dotcom and received on or about 14 June 2010;
c) Second donation in the sum of $25,000 made by Megastuff Limited on behalf of Kim Dotcom and received on or about 14 June 2010.
[25] I delivered my verdict on 5 June 2014.14 I was not satisfied that the particular relating to the Sky City donation was proved. I did, however, find that the particulars relating to the two Megastuff donations were proved. Critical to this finding was my acceptance of much of the evidence of Mr and Mrs Dotcom and Mr Tempero. The thrust of their evidence was:
(a) that during a lunch at the Dotcom residence attended by Mr and Mrs Banks in June 2010, there was a discussion about the mayoral campaign;
(b) that Mr Dotcom agreed to donate $50,000 to the campaign; and
(c) that Mr Banks asked that the $50,000 donation be split into two
$25,000 cheques, so that they could be treated for disclosure purposes as being anonymous.
I accepted evidence given by Mrs Banks and another defence witness, Mr Scott Campbell (who was Mr Banks’ “handler”), that the lunch was held on 5 June 2010, and not 9 June 2010 as asserted by Mr Dotcom. I rejected evidence given by Mrs Banks that the lunch was attended by two American businessmen and that there was no discussion at the lunch about electoral donations.
[26] I sentenced Mr Banks on 1 August 2014.15 Five days later, Mr Banks filed a notice of appeal with the Court of Appeal.
[27] On 5 September 2014, Mr Banks filed an application with the Court of Appeal seeking to adduce fresh evidence, namely an affidavit from Mrs Banks, and affidavits from two American businessmen – Mr David Schaeffer and Mr Jeffery Karnes. They deposed that they were at the lunch on 5 June 2010 and that donations to Mr Banks’ mayoral campaign had not been discussed. Rather the discussion involved Mr Dotcom’s former business, Megaupload, the internet, and a plan to build a sub-sea fibre optic cable between the United States and New Zealand.
[28] Mr Dacre was conducting the appeal for the Crown. He instructed another barrister, Mr Rowan Butler, to interview Mr Dotcom about the affidavits which Mr Banks was seeking to put before the Court of Appeal.
[29] Mr Butler met with Mr Dotcom and his then counsel on 29 September 2014. After the meeting Mr Butler prepared a memorandum recording what had been discussed. In short, Mr Dotcom confirmed to Mr Butler that the evidence from Messrs Schaeffer and Karnes was correct. Mr Dotcom said that there had been a second luncheon meeting on 9 June 2010, attended by Mr and Mrs Banks, at which the electoral donations were discussed, and that the two cheques, each of $25,000, drawn on Megastuff’s account, were written and dated on that same day.
[30] Mr Butler promptly sent the memorandum to Mr Dacre. Mr Dacre did not then disclose Mr Butler’s memorandum to anyone at the Crown Law Office. Nor did he disclose it to Mr Banks or defence counsel.
[31] The Court of Appeal heard the conviction appeal on 29 October 2014. It was, of course, unaware of Mr Butler’s memorandum and what it recorded. It issued its judgment on 28 November 2014. It granted Mr Banks’ application to adduce the evidence of Messrs Schaeffer and Karnes. It expressed the view that their evidence appeared to be credible and cogent. It noted that the Crown relied for proof of Mr Banks’ knowledge of the falsity of the return on what was said at the lunch. It was satisfied that, if the evidence of Messrs Schaeffer and Karnes had been accepted at
trial, it might well have led me to conclude that the Crown had failed to prove Mr Banks’ knowledge to the requisite standard. It also observed that had the evidence been called, I may have rejected the evidence of Mr and Mrs Dotcom and Mr Tempero. It allowed the appeal, set aside the conviction, and ordered a new trial.16
[32] On the same day, Mr Dotcom posted a “tweet”, saying “Fun fact for the Court of Appeal: Meeting with US Businessmen & John Banks about Pacific Fibre Cable took place days before donation meeting”.
[33] In January 2015, the Solicitor-General decided not to stay the prosecution, and shortly thereafter the re-trial was set down for two weeks, to commence on 20
July 2015.
[34] The memorandum prepared by Mr Butler was disclosed by Mr Dacre to the
Crown Law Office on 27 January 2015 and to Mr Banks’ defence counsel on 27
February 2015.
[35] A few days later, on 2 March 2015, Mr Banks filed a memorandum in this Court relating to the disclosure of Mr Butler’s memorandum and advising that a further s 347 application would be made. Further, on 12 March 2015, a recall application was filed by Mr Banks with the Court of Appeal. This application was opposed by the Crown.
[36] On 22 April 2015, an additional brief of evidence from Mr Dotcom was disclosed to the defence. Mr Dotcom asserted in the additional brief that there had been a further lunch on 9 June 2010, and that the cheques had been signed at that lunch. He said that he was not sure whether or not Mrs Banks was present.
[37] The recall application was heard by the Court of Appeal on 28 April 2015. On 19 May 2015, it allowed the recall application, cancelled the order for a re-trial and directed that a verdict of acquittal be entered.17 It considered that it had been misled and that there had been a serious error of process. The Court noted that the Crown case on appeal had two limbs – first, that it did not matter when the lunch
was held, and second, that the lunch was held on 5 June 2010 and that the discussion
16 Banks v R [2014] NZCA 575.
17 Banks v R [2015] NZCA 182.
attributed to Mr Dotcom and Mr Banks took place then. The Court considered that the evidence of Messrs Schaeffer and Karnes was such that no reasonable fact finder could conclude that there was a discussion about donations during the lunch on 5
June 2010. Although it was not part of the Crown case that the lunch was held on 9
June 2010, the Court noted the defence evidence at trial that Mr and Mrs Banks could not have attended a lunch with Mr Dotcom on 9 June 2010 because both were otherwise engaged on that day. It recorded that the Crown had not challenged that evidence at trial, and that it had been accepted by me. The Court also noted:
(a) the assertion by the Crown that there may have been another meeting between Mr Dotcom and Mr Banks, which Mrs Banks may not have attended, and that the donations may have been discussed at this alternative meeting;
(b) the defence response, namely:
(i) that the evidence at trial traversed the limited contact between
Mr Dotcom and Mr Banks;
(ii)that it was established that they met on four occasions only, including the lunch held at Mr Dotcom’s house in June 2010, which Mrs Banks attended; and
(iii)that there had been no suggestion at trial that the discussion about donations had been held at any of the other three meetings when Mr Dotcom met with Mr Banks, or on any other occasion.
The Court observed that the suggestion that there was another occasion (other than the lunch on 5 June 2010) when Messrs Dotcom and Banks may have met and discussed electoral donations would be “an entirely new account”, inconsistent not only with the evidence at trial, but also with Mr Butler’s memorandum.
[38] Mr Banks subsequently made an application for costs to the Court of Appeal. That application sought costs both in this Court and in the Court of Appeal.
However, the Court of Appeal indicated that it would not deal with costs in this
Court, and that this was a matter best dealt with this jurisdiction.
[39] The Court of Appeal costs application was subsequently settled. There is no judgment from the Court of Appeal and I do not know the terms of the settlement.
Costs in Criminal Cases Act 1967
[40] The application for costs in this Court is brought pursuant to the Costs in
Criminal Cases Act 1967. Relevantly, s 5 of that Act provided as follows:18
5 Costs of successful defendant
(1) Where any defendant is acquitted of an offence or where the information charging him with an offence is dismissed or withdrawn, whether upon the merits or otherwise… the Court may, subject to any regulations made under this Act, order that he be paid such sum as it thinks just and reasonable towards the costs of his defence.
(2) Without limiting or affecting the Court's discretion under subsection (1) of this section, it is hereby declared that the Court, in deciding whether to grant costs and the amount of any costs granted, shall have regard to all relevant circumstances and in particular (where appropriate) to—
(a) Whether the prosecution acted in good faith in bringing and continuing the proceedings:
(b) Whether at the commencement of the proceedings the prosecution had sufficient evidence to support the conviction of the defendant in the absence of contrary evidence:
(c) Whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty:
(d) Whether generally the investigation into the offence was conducted in a reasonable and proper manner:
(e) Whether the evidence as a whole would support a finding of guilt but the information was dismissed on a technical point:
(f) Whether the information was dismissed because the defendant established (either by the evidence of witnesses called by him or by the cross-examination of witnesses for the prosecution or otherwise) that he was not guilty:
(g) Whether the behaviour of the defendant in relation to the acts or omissions on which the charge was based and to the
18 Section 5 was amended as from 1 July 2013 to take into account the Criminal Procedure Act
2011.
investigation and proceedings was such that a sum should be paid towards the costs of his defence.
(3) There shall be no presumption for or against the granting of costs in any case.
(4) No defendant shall be granted costs under this section by reason only of the fact that he has been acquitted or discharged or that any information charging him with an offence has been dismissed or withdrawn.
(5) No defendant shall be refused costs under this section by reason only of the fact that the proceedings were properly brought and continued.
[41] The following principles have emerged from the case law:
(a) while success in the proceeding is a jurisdictional prerequisite to an application, the fact of success is neutral when the discretion whether or not to award costs is exercised;19
(b) the Court has a broad discretion;20
(c) the seven matters set out in s 5(2), or as many as are appropriate, are to be considered;21
(d)the expression “shall have regard to” contained in s 5(2) is not synonymous with the expression “shall take into account”;22
(e) the matters set out in s 5(2)(a) to (e) refer in a general way to the propriety, conduct and strength of the prosecution case. Affirmative answers might tend to inhibit or weigh against an award of costs or diminish the quantum of the same;23
(f) the terms “proper steps” and “in a reasonable and proper manner” in s
5(2)(c) and (d), respectively, mean something less than would be
19 McLeod v R [2016] NZHC 221 at [10].
20 Solicitor-General v Moore [2000] 1 NZLR 533 (CA); R v Reid [2007] NZSC 90, [2008] 1 NZLR
575.
21 R v CD [1976] 1 NZLR 436 (SC) at 437; R v Connolly (2007) 23 NZTC 21,172 (CA) at [11]- [17]; Delamere v Serious Fraud Office [2009] NZCA 142, [2009] 3 NZLR 94 at [27].
22 R v CD, above n 21, at 437.
23 At 437.
adopted by a reasonably prudent prosecutorial authority. It is a difficult burden to surmount;24
(g)the fact that a prima facie case is established at a preliminary hearing, or that a Judge refuses a discharge, is likely to support the conclusion that there was sufficient evidence at the commencement of the proceeding;25
(h)the matters set out in s 5(2)(g) are concerned with behaviour justifying an award, and not with behaviour disqualifying an award;26
(i)the factors set out in s 5(2) are qualified by the words “without limiting … the Court’s discretion”. Regard should be had to all relevant circumstances, and not simply those set out in s 5(2)(a)-(g).27
There is a danger in narrowing relevant considerations by reference to the wording of s 5(2) or in trying to fit particular circumstances into one of its subparagraphs;28
(j)costs are not to be awarded only because the defendant has been acquitted. An applicant must be able to point to some relevant circumstances, either within the criteria, or otherwise, that justify an award.29
[42] The essence of the discretion was distilled by Hardie Boys J in R v Margaritis
as follows: 30
The various criteria in s 5 really come down to two questions: was the prosecution reasonably and properly brought and pursued; did the accused bring the charge on his own head.
This observation is a pithy summary and it has been cited in numerous subsequent cases. It is, however, no substitute for the statutory provisions.
24 Long v R [1996] 1 NZLR 377 (HC) at 381.
25 R v Sotheran HC Palmerston North T31/00, 2 May 2002 at [34].
26 R v AB [1974] 2 NZLR 425 (SC) at 432; R v CD, above n 21 at [438].
27 Cavanagh v Police [2013] NZHC 2232 at [19].
28 Solicitor-General v Moore, above n 20, at [32]-[33].
29 Jones v Civil Aviation Authority [2009] NZCA 240 at [17], citing R v Gillespie (1993) 10 CRNZ
668 (HC) at 672-673.
30 R v Margaritis HC Christchurch T66/88, 14 July 1989 at 8.
Submissions
[43] Mr Jones QC, acting for Mr Banks, submitted that the key evidence called by the Crown, and relied on by me in entering a conviction in relation to the Megastuff donations, was fabricated, and that as a result Mr Banks has suffered a grave injustice. He submitted that Mr Banks was not guilty of the charge he faced at trial, that he has subsequently proved his innocence, and that he has been acquitted. He said that, in terms of s 5(1) of the Act, it is just and reasonable in the circumstances of this case that Mr Banks should receive a costs award. He argued that the prosecution was fundamentally flawed because the evidence was fabricated, and that it was left to Mr Banks to establish at trial a number of key facts which the Crown had failed to address either properly or at all. In particular, he referred to the date of the lunch, where the Megastuff cheques were banked, and how the Sky City donation was provided to the campaign treasurer who was responsible for handling finances – Mr Lance Hutchison. He argued that, once the Crown took over the prosecution, it took no steps to investigate further. He put it to me that there were obvious enquiries that should have been made. Importantly, he noted that both Mr and Mrs Banks, in their statements to the police, said that there were additional people present at the lunch with Mr Dotcom, and in particular that Mrs Banks said that there were two American businessmen present. He noted that no enquiries were carried out by the Crown to identify who those businessmen were, despite the fact that their identities would have been known, certainly to Mr Dotcom, and perhaps to Mrs Dotcom. He argued that the Americans’ evidence, when it was ultimately obtained by Mrs Banks, disproved the Crown case. He noted that Mr Dotcom has accepted the evidence of the two Americans, and that it follows that Mr Dotcom’s evidence, Mrs Dotcom’s evidence and Mr Tempero’s evidence was “a concoction” which misled the Court.
[44] Mr Billington QC, for the Crown, argued that this was a case that had to go to trial. He noted that three District Court and two High Court Judges considered that there was a prima facie case prior to trial, and that Mr Heron, in his capacity as Solicitor-General, personally reviewed the prosecution on two occasions, with the benefit of thorough advice, and that he also concluded that it should go to trial. He argued that the prosecution was reasonably and properly brought, and that Mr Banks has failed to discharge the onus on him to point to cogent relevant circumstances
justifying an award of costs. He accepted that the evidence of Messrs Schaeffer and Karnes was critical, but argued that prior to Mr Dotcom accepting that that evidence was correct, neither the defence, nor the Crown, appreciated its significance. He noted that both were aware that Mrs Banks had asserted that two American businessmen were present, but that the defence took no steps to seek out the Americans’ evidence prior to trial. He submitted that the significance of the evidence only became apparent once it was ultimately obtained and the Crown became aware of it, and that only then did it become apparent that the evidence may well have affected the credibility of Mr and Mrs Dotcom and Mr Tempero. He submitted that there was nothing in the case before that point which should have put the Crown on notice, or which required it to make further enquiry.
Analysis
[45] The charge was brought under s 134 of the Local Electoral Act, which provided, in 2010, as follows:
134 False Return
(1) Every candidate commits an offence who transmits a return of electoral expenses knowing that it is false in any material particular, and is liable on conviction on indictment to imprisonment for a term not exceeding 2 years or to a fine not exceeding $10,000.
[46] There were then four elements to the offence:31
(a) was the person whose conduct is under scrutiny a candidate?; (b) did the candidate transmit a return of electoral expenses?;
(c) was the return of electoral expenses false in any material particular?;
and
(d)did the candidate know that the return of electoral expenses was false in any material particular at the time of the transmission?
[47] At trial there was no dispute about the first and second elements.32 The dispute was in relation to the third and fourth elements. The Crown alleged that the
31 R v Banks, above n 14, at [28].
falsity was the recording of three donations as coming from anonymous donors when
Mr Banks in fact knew who the donors were.
Jurisdictional threshold
[48] Mr Banks has been acquitted of the charge.33 It follows that the jurisdictional threshold contained in s 5(1) of the Act is met, and that the Court has jurisdiction to order that he be paid such sum as it thinks just and reasonable towards his costs. The acquittal of itself does not entitle Mr Banks to an award of costs. Rather, the Court is required to have regard to all relevant circumstances and in particular those listed in s 5(2) of the Act.
[49] Here, Mr Banks has sought his actual costs. There is no breakdown as between the Sky City particular and the Megastuff particulars.
[50] It is, however, helpful to consider each particular in turn.
The Sky City donation
[51] I consider, first, the Crown’s conduct in taking over and initially pursuing the
prosecution.
[52] Prior to trial, the Crown had a witness statement from Ms Anna McKinnon, who was Executive Assistant to Mr Nigel Morrison, the then Managing Director and Chief Executive of Sky City. She said that she organised a meeting between Mr Morrison and Mr Banks. It also had a witness statement from Mr Morrison. He said that he met with Mr Banks in May 2010, together with another person, in his office at Sky City. He said that during the meeting he handed Mr Banks a cheque for
$15,000, enclosed in a Sky City envelope, by way of a donation to his mayoral campaign.
[53] The Crown had witness statements about the drawing of a cheque for
$15,000, the fact that a first cheque had to be cancelled, and that a new cheque had to
be written, because the first cheque was in Mr Banks’ personal name, whereas the second cheque was made out to “Team Banksie 2010”.
32 At [82] to [83].
33 Banks v R, above n 17.
[54] In his police interviews, Mr Banks said that he had no recollection of the meeting with, or of receiving any cheque from, Mr Morrison.
[55] The campaign treasurer, Mr Hutchison, in his witness statement, said that he believed he received the Sky City cheque in the mail, but that, if it did not come in the mail, it would have come from “one of the team” – i.e. Mr Banks’ campaign team. He said that he recalled ringing a person who he knew worked in the legal department at Sky City, and asking that person whether Sky City wanted the donation to be anonymous, or to have its name on the donations ledger. He said that the advice he was given was that Sky City wanted its donation to remain anonymous. In a further witness statement, he said that the person he rang would have been Mr Peter Treacy.
[56] The Crown had a witness statement from Mr Treacy. He did not refer to any discussion with Mr Hutchison. Rather, he said that Sky City did not stipulate to Mr Banks that the donation he received was to remain anonymous.
[57] In addition, the Crown had the judgments of Judge Mill (x 2), Judge Paul and
Judge Gittos.
[58] In my judgment, the Crown acted in good faith in taking over the conduct of the private prosecution from Mr McCready (and his company) and in initially continuing the prosecution (s 5(2)(a)). It had, when it took over the proceeding, sufficient evidence to support Mr Banks’ conviction in the absence of contrary evidence (s 5(2)(b)). As matters progressed it gained the benefit of Heath J’s judgment on Mr Banks’ application for review, and my judgment on the s 347 application.
[59] These matters of themselves do not compel the conclusion that Mr Banks should be refused an award – s 5(5). It is necessary to consider the additional statutory considerations and any other relevant circumstances.
[60] There was no evidence before me to suggest that any material came into the Crown’s hands which suggested that Mr Banks might not be guilty in relation to the Sky City donation, and which the Crown should have taken proper steps to investigate (s 5(2)(c)). Rather, the Crown relied on the investigation undertaken by
the police. As Mr Jones pointed out, it did not further investigate the matter, but in my view it acted reasonably and properly in not doing so given the materials and information it had (s 5(2)(d)).
[61] It cannot be said that the charge was dismissed on a technical point (s
5(2)(e)). At trial, I was satisfied beyond reasonable doubt that Mr Banks did know that he received a donation from Sky City.34 In doing so, I accepted the evidence of the various Sky City witnesses, and also the evidence of Mr Hutchison. All were called by the Crown. I also accepted the evidence of Mr Banks’ handler, Mr Campbell, who was called by the defence. I was satisfied that the electoral return was false in a material particular, because it declared the Sky City donation as
anonymous in circumstances where Mr Banks knew that Sky City had made a donation to his mayoral campaign, and where it could reasonably be inferred that Mr Banks would have known that the donation was for a sum in excess of $1,000. I was not, however, sure that Mr Banks actually knew that the return was false in relation to the Sky City donation. I considered that Mr Banks might have thought that Mr Hutchison knew enough to record that the donation came from Sky City, and that he might have abstained from further enquiry when he signed the return, simply because he was careless, and not because he knew what the answer was going to be. I was not persuaded beyond reasonable doubt that Mr Banks knew that the return was false because it did not record Sky City’s name as a donor to the campaign in the
sum of $15,000.35
[62] All evidence the Crown called in relation to the Sky City donation was accepted by me. What was in issue was whether or not that evidence was sufficient to prove beyond reasonable doubt that Mr Banks knew of the falsity in the return. That issue could not be resolved without a trial.
[63] Mr Jones submitted that the defence had to adduce evidence filling an evidential gap – namely how the envelope containing the donation cheque came into Mr Hutchison’s hands. He noted that the defence called Mr Campbell, and that it
was his evidence that he received the envelope from Mr Banks after Mr Banks met
34 R v Banks, above n 14, at [86]-[100].
35 At [141]-[147].
with Mr Morrison at Sky City, and that Mr Banks told him to give it to Mr
Hutchison. Mr Jones relied on s 5(2)(f).
[64] Mr Jones is correct that Mr Campbell’s evidence did assist in clarifying the evidential trail, but it was not a point of any significance at the trial. What was more important was that I was able to infer, from the evidence overall, that the fact that a meeting was going to be held between Mr Morrison and Mr Banks was known by various persons in Mr Banks’ campaign team, and that the instructions to issue a new cheque in the name “Team Banksie 2010” were likely to have come from somebody within Mr Banks’ campaign team. I considered that it must have been known to members of the campaign team that Sky City was going to make a donation to the campaign. In my judgment it was a reasonable possibility that Mr Banks may have believed that Mr Hutchison did know enough about the donation to record in the
return that it came from Sky City.36
[65] Mr Banks did not establish that he was not guilty. Rather, the Crown failed to prove the Sky City particular against him beyond reasonable doubt. I do not consider that s 5(2)(f) assists Mr Banks in his application for costs.
[66] It is also noteworthy that I found that it was unfortunate that Mr Banks did not give rather fuller instructions to Mr Campbell and/or Mr Hutchison, and that Mr Banks may have abstained from further enquiry when he signed the return because he was careless, and not because he knew what the answer was going to be. Those findings have not been challenged and they were not criticised by Mr Jones in his submissions on the costs application. Mr Banks’ behaviour relevant to the Sky City donation does not support an award of costs in his favour (s 5(2)(g)).
[67] There were no other relevant circumstances put forward by Mr Banks in relation to the Sky City donation, and there are none that are obvious to me.
[68] In my judgment, the Crown’s conduct in relation to the Sky City donation
was appropriate and unexceptional. Mr Banks is not entitled to costs under s 5 of the
Act by reason only of the fact that he has been acquitted (s 5(4)), and there is nothing
36 At [144].
which Mr Banks can point to which entitles him to an award of costs in regard to this aspect of the matter.
The Megastuff donations
[69] Again I first consider the Crown’s conduct in taking over and initially
pursuing the prosecution.
[70] Mr Dotcom had given a witness statement. He said that, on 9 June 2010, Mr Banks and his wife came to his Coatesville mansion for lunch. He said that, at the lunch, he offered to donate $50,000 to Mr Banks’ mayoral campaign, and that the offer was promptly accepted. Mr Dotcom said that, in Mr Banks’ presence, he instructed Mr Tempero to ask his chief financial officer, Mr McKavanagh, to prepare a cheque. Mr Dotcom said that Mr Banks intervened and asked that the cheque should be split into two cheques, each of $25,000, so that he would not have to declare where they came from. Mr Dotcom said that he was a little offended by this explanation, as he felt that it implied that Mr Banks did not want to be seen to be associated with him. Mr Dotcom said that he told Mr Banks that he did not have a problem with it being known that he had made a donation to him, and that Mr Banks responded that he wanted to help Mr Dotcom, and that he could help him more effectively if no-one knew about the donation.
[71] Mr Dotcom’s version of what happened at the lunch was supported in witness statements given by Mrs Dotcom and by Mr Tempero.
[72] Mr Dotcom also said, in his witness statement, that two cheques were prepared by Mr McKavanagh, that they were made out to Team Banksie, and that he signed them. Mr Dotcom could not remember whether the cheques were signed during or after his meeting with Mr Banks.
[73] Mr McKavanagh said, in his witness statement, that he took the two cheques with him because he was going to the South Island on holiday. He said that he posted them from Queenstown. He could not remember who he posted them to.
[74] Mr Tempero said that, at around this time, he had a conversation with Mr
Banks, and that he would have asked Mr Banks whether the cheques had cleared or
not. He said that Mr Banks confirmed that the cheques had been cleared, and that he, in turn, told Mr McKavanagh of this.
[75] Mr Dotcom, in his witness statement, said that he had a telephone discussion with Mr Banks a few days later. He said that, during the course of this conversation, he asked Mr Banks whether or not he had received his donation, and that Mr Banks acknowledged that he had and thanked Mr Dotcom for it.
[76] Mrs Dotcom confirmed this conversation in her witness statement.
[77] When Mr Banks was interviewed by the police, he denied any “actual knowledge” of the Megastuff donations. He did accept, however, that he had a discussion about donations with Mr Dotcom. He said that, on the day of the lunch, he and Mr Dotcom went into a conservatory. The relevant parts of the interview proceeded as follows (“B” is Mr Banks):
B…So I called him aside and we went out to his conservatory and I said, “I need some support from you. I’m raising a lot of money $25,000 lots. And he offered me 200,000. Plus he says I can give you quite a lot of access to social media…
…
So I asked him for 25 thous, thousand dollars and I think he said something like, “I could fund all of this campaign.” That would’ve been a worry actually from anyone. We thought that $25,000 was a good number about right to ask from high networthers. And I said to him you can, if you want give me more with other entities and I mentioned the Pacific Cabling Company. I don’t know whether he said, yes I’ll support you, I don’t know whether he said, no. But he sort of got up and wandered around. While he was talking he was wandering around a little so, he was looking at me like this as he was wandering around he didn’t sit here looking at me like this, he was just sort of wandering around and looking at pictures of himself and going into a room where there were racing cars going round and looking at goldfish. A very strange man…
…
[Interviewer] See, this offer of money then, when you say you were shocked by amounts that which was talked about because he talked about funding the whole campaign. Um, you said
$25,000. B Yes.
[Interviewer] You said to him. Um, what was his reaction to, to that?
B Nonplussed, not excited, no interest. I don’t even recall him
saying yes.
[Interviewer] And who was present with you at the time when this offer was made from him?
BI think just him and I sitting on a bench in a conservatory with a huge, I remember a statue of a fighting warrior on – was standing there in about 600 kgs of steel, quite intimidating, but he was wandering around. He, he wasn’t interested in the conversation, I think he heard but it wasn’t something that was really quite interested in.
A little later, Mr Banks answered as follows:
B …And of course it was at that lunch that I discussed the
donations.
[Interviewer] And who was it to, I may have missed, just to clarify who was it that raised that idea of donations?
BUm, during the lunch I called aside DOTCOM to go out into the conservatory because there was something I wanted to discuss with him. I don’t remember what I said, I raised it then.
[Interviewer] And you’ve said that during the meeting obviously he’s um, offered you $200,000 and you’ve explained that you thought that was a, -
B - well just went nah, nah. [Interviewer] - outrageous amount?
BWell I wouldn’t have said that I would’ve just said, “Nah, nah, nah.”
[Interviewer] Um, and that you also made mention that he could fund your whole campaign.
B No, no, no, the mention to fund the whole campaign I think
came from Wayne TEMPERO…
Mr Banks also accepted that he told Mr Dotcom he could make any donation anonymously:
[Interviewer] …What have you told your team, Lance Aaron, Michelle,
about this, the possible donation?
B Nothing, nothing
[Interviewer] Why haven’t you mentioned it to them Mr BANKS?
BWell I wanted him to make it, ah, and I, I told him he could make it anonymous. I gave him slips, I think on that day, I think on that day I gave TEMPERO , ah, a number of slips
[Interviewer] And the reason for giving him the slips?
B Oh, I wanted the money…
There is also the following passage a little later in the interview:
BWell I don’t think DOTCOM, I don’t remember DOTCOM ringing up and asking it to be anonymous. DOTCOM was told it could be anonymous, DOTCOM, ah, lodged that anonymously. I don’t have any knowledge of DOTCOM ringing me up and saying is this anonymous or Lance, or anyone else, no. No. Most people know that if they lodge some money it can be done anonymously and its anonymous and I respect it, it’s not anonymous for me because for all of these people I couldn’t careless if they weren’t anonymous…
(Italics added)
[78] In her witness statement, Mrs Banks said that there was a discussion at the
lunch about the internet being used to assist Mr Banks’ electoral campaign.
[79] The police also had a witness statement from an independent witness, Mr Greg Towers, who was Mr Dotcom’s solicitor at the time. In early 2012, Mr Dotcom had been arrested and remanded in custody. Mr Dotcom suffered from back problems and Mr Towers said, in his witness statement, that he was asked by Mr Dotcom to contact Mr Banks, who was by that time a member of Parliament, and seek his assistance in obtaining an additional mattress for Mr Dotcom. Mr Towers said that, on 8 February 2012, Mr Banks called him back in response to a message he had left for him. He said that Mr Banks told him that, as much as he wanted to publicly support Mr Dotcom, it might backfire if the election support became known.
[80] The Crown also had the two cheques drawn on Megastuff ’s account, each of
$25,000.
[81] The Crown would have been aware of the various District Court judgments and the two High Court judgments I have already referred to.
[82] In my judgment, the Crown acted in good faith in taking over and initially continuing the proceedings against Mr Banks in relation to the Megastuff donations (s 5(2)(a)). When the conduct of the proceedings was taken over by the Crown, there was sufficient evidence to support a conviction being obtained against Mr Banks in the absence of contrary evidence (s 5(2)(b)).
[83] I now turn to s 5(2)(c)).
[84] Mr Jones submitted that the Crown should have taken further steps to confirm the date of the lunch, and that it should have sought to get further evidence from the two American businessmen, who Mrs Banks had said were at the lunch.
[85] I do not consider that there is anything in this argument.
[86] In Mr Banks’ police interview, he said that the lunch was in early June 2010. Mrs Banks said the same in her witness statement. The date of the lunch was not then of any great moment. The defence subsequently made enquiries and it was able to establish at trial that the lunch was on 5 June 2010, and not 9 June 2010 as asserted by Mr Dotcom. It did not, however, put the Crown on notice of this. From the Crown’s perspective, and at the time, the precise date was not a matter of any moment, particularly given Mr Banks’ police interview.
[87] Mr Jones submitted that the Crown should have taken further steps to ascertain the identity of the two American businessmen and that, had it done so, it would have become obvious that there were potential credibility problems with Mr and Mrs Dotcom’s evidence and with Mr Tempero’s evidence.
[88] This submission has to be seen in context. In his police interview, Mr Banks said that there were numerous:
business looking people um, I think from Germany, England and America, and the topic of the conversation at lunch was mainly about the investment in the Pacific communications link that they were investors in. As well as that, um, Kim Dotcom’s internet business that I couldn’t understand …
Mrs Banks was rather more specific in her witness statement. She said that there were “two or three other people there”. She said that “two of them were American guys who were talking about the Pacific cabling …”.
[89] I accept that the Crown could have asked Mr Dotcom about the other people said to have been present and then sought to track them down. Importantly, however, there was nothing available to the Crown at the time which suggested that the evidence of Mr Dotcom, Mrs Dotcom and Mr Tempero may have been suspect. I do not consider that, in the circumstances as they then stood, the Crown was bound to seek out the others who were said to have been present at the lunch.
[90] The Court of Appeal, in its first judgment, stated as follows:37
Mr Jones sought to persuade us that the new evidence was fresh. To that end Mrs Banks was called before us for cross-examination on her affidavit. She frankly acknowledged that she could have made the same inquiries before trial but did not think it necessary. She said that “I didn’t think I would not be believed.” Before trial she told Mr Banks’ solicitors what she knew of the two Americans, including the discussion about the trans-Pacific cable. It seems obvious that the importance of the evidence was not adequately appreciated by Mr and Mrs Banks or their legal advisors, perhaps because they assumed too readily that the Crown witnesses could be discredited. There is no evidence that any substantive inquiries were made. The evidence is not fresh.
[91] The Crown also did not appreciate the significance of such evidence as the American businessmen might have been able to give, presumably because it assumed that the Crown witnesses would be believed. From its perspective, the evidence of Mr and Mrs Dotcom and Mr Tempero was in part supported by what Mr Banks had said in his police interview. It was also supported by Mr Towers’ evidence, and the Crown could reasonably have assumed that Mr Towers was likely to be considered a reliable witness.
[92] The significance of the American businessmen’s evidence only became apparent once it was obtained and when Mr Dotcom accepted that it was correct. Only then was the reliability of Mr Dotcom’s, Mrs Dotcom’s and Mr Tempero’s evidence at trial thrown into question, and only then did the Crown case start to unravel.
[93] The Americans’ evidence was made available to the Crown in early
September 2014. Mr Dotcom’s acceptance of the Americans’ evidence occurred on
29 September 2014, when he met with Mr Butler. Mr Dacre was acting for the
Crown and it is fixed with his knowledge from the time he acquired it, although in
37 Banks v R, above n 16, at [27].
fact he did not promptly advise the Crown Law Office. Indeed, Mr Heron only became aware of Mr Butler’s memorandum recording Mr Dotcom’s acceptance of the American businessmen’s evidence on 27 January 2015. Mr Banks is seeking costs for the period commencing 3 December 2013 and ending 1 August 2014. The evidence and Mr Dotcom’s change in position fall well after 1 August 2014. Prior to
1 August 2014 there was, in my judgment, nothing to put the Crown on notice of the potential difficulty in its case. There was no matter which came into the Crown’s hands at the relevant time which suggested that Mr Banks might not be guilty (s
5(2)(c)).
[94] In my view, the Crown’s investigation into the offence charged was conducted in a reasonable and proper manner, and by reference to the material which was before it at all relevant times (s 5(2)(d)).
[95] Again, my conclusion in regard to these matters does not compel the conclusion that Mr Banks should not receive a costs award (s 5(5)), and again I go on to consider other matters.
[96] Mr Banks was acquitted by the Court of Appeal, but not on a technical point (s 5(2)(e)). Rather, the Court acquitted Mr Banks because it considered that on the state of the evidence before it, no reasonable fact finder could be satisfied of Mr Banks’ guilt beyond reasonable doubt.
[97] Mr Jones relied on s 5(2)(f).
[98] Defence counsel cross examined Mr Dotcom at trial about each of the limited number of occasions on which he and Mr Banks had met and Mr Banks called evidence from his wife and Mr Campbell which established that the lunch was held on 5 June 2010. Mrs Banks and Mr Campbell were not cross examined in relation to their respective assertions, and I accepted their evidence. The limited number of occasions on which Mr Banks and Mr Dotcom met, and the date of the lunch, became important when the defence obtained the affidavits from Messrs Schaeffer and Karnes confirming that they attended the lunch on 5 June 2010, and that the issue of donations was not discussed at that lunch. That evidence was not, of course, before me at trial. It did, however, find favour with the Court of Appeal, and ultimately it resulted in Mr Banks’ acquittal. But for Mrs Banks’ efforts in tracking
down the Americans, and in obtaining the affidavits from them, it is likely that the conviction entered by me would have stood.
[99] Given the broad discretion invested in me, I am conscious of the danger of focussing too narrowly on the wording of s 5(2) but, in my judgment, s 5(2)(f) is not engaged.
[100] First, as I have already noted, Mr Banks seeks costs for the period 3
December 2013 to 1 August 2014. The evidence which the Court of Appeal relied on to acquit was raised before the Court of Appeal, and well outside that timeframe. Costs in the Court of Appeal were settled between the parties. Secondly, this is not a situation where Mr Banks established that he was not guilty. Rather, the Court of Appeal, relying on the Americans’ evidence and Mr Dotcom’s acceptance of the same, found that no reasonable fact finder could be satisfied beyond reasonable doubt that Mr Banks was guilty.
[101] It was also asserted by Mr Jones that it was left to Mr Banks to establish that Mr McKavanagh’s version of events, in particular when he said that he took the Megastuff cheques to Queenstown, and posted them from there, was untrue. Mr Jones is correct in this assertion, but I do not consider that this is particularly relevant. I did not accept Mr McKavanagh’s evidence at trial, and it was not a matter which played any great part in my Reasons for Verdict judgment.
[102] I do not consider that, on the facts of this case, s 5(2)(f) assists Mr Banks.
[103] I accept, of course, that no person accused of a crime is required to establish his or her innocence. It is, however, relevant that Mr Banks could have called Messrs Schaeffer and Karnes himself. He did not do so. He could have made application under s 368(2) of the Crimes Act, which was then in force, asking me to direct the calling of those witnesses. Again, he did not do so. Mr Banks has to bear some responsibility for what had occurred at trial and in my judgment his behaviour in regard to the proceedings does not support an award of costs in his favour (s
5(2)(g)).
[104] There was one other factor which Mr Jones referred to repeatedly in his submissions. It was asserted that Mr and Mrs Dotcom’s evidence, and Mr Tempero’s
evidence, was “a fabrication”. I do not accept that the matter is that simple. As a result of the acquittal entered by the Court of Appeal, the matter has not been retried. Mr and Mrs Dotcom and Mr Tempero have not been charged with perjury, insofar as I am aware, and it cannot be baldly asserted that their evidence, and Mr Tempero’s evidence, was fabricated. At best, from Mr Banks’ perspective, it can be said that the evidence that they gave at trial is inconsistent with the affidavits of the two American businessmen, and further that Mr Dotcom’s acceptance of these affidavits throws into significant doubt the evidence which he, Mrs Dotcom and Mr Tempero gave at trial. While there was however other material which supported their evidence, it became a case where no reasonable fact finder could be sure that Mr Banks was guilty.
[105] In the exercise of the discretion conferred on me, and for the reasons I have set out, I do not consider that Mr Banks is entitled to an award of costs in respect of the Megastuff donations.
Result
[106] Mr Banks’ application for an award of costs is declined.
[107] As a result, I do not need to go on to consider quantum and I do not do so.
Mrs Banks
[108] In my Reasons for Verdict judgment, I recorded that I did not consider Mrs Banks to be a reliable witness in regard to certain aspects of her evidence given at trial – in particular whether there were any American businessmen at the lunch and whether the subject of electoral donations was discussed.
[109] A Court can, of course, only deal with a case on the evidence before it, and I
did not have the evidence of the American businessmen before me at the time.
[110] I have since read the affidavits of the American businessmen which have now been filed. I am also aware that Mr Dotcom accepts the same. Based on what I now know, I accept that I was in error when I made an adverse finding as to Mrs Banks’ credibility in relation to the matters I have noted above. I appreciate that my finding will have upset her and caused her significant embarrassment and distress. This distress was, no doubt, compounded by the considerable media coverage given to the
trial and to my Reasons for Verdict judgment. It is appropriate that I should
acknowledge my error, and I do so.
Wylie J
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