Commissioner of Police v Dotcom

[2012] NZHC 634

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-33 [2012] NZHC 634

IN THE MATTER OF     an application pursuant to the Mutual

Assistance in Criminal Matters Act 1992

BETWEEN  THE COMMISSIONER OF POLICE Applicant

ANDKIM DOTCOM First Respondent

ANDBRAM VAN DER KOLK Second Respondent

ANDMEGASTUFF LIMITED Third Respondent

ANDMONA DOTCOM Interested Party

Hearing:         4 April 2012

Counsel:         A Toohey and D Boldt for Applicant

W Akel, R Gapes and L Stringer for Respondents
A L Lloyd and R W Harris for Mrs Dotcom

Judgment:      18 April 2012

JUDGMENT OF POTTER J

on application to register foreign restraining orders

In accordance with r 11.5 High Court Rules

I direct the Registrar to endorse this judgment with a delivery time of 1.30 p.m. on 18 April 2012

THE COMMISSIONER OF POLICE V DOTCOM HC AK CIV-2012-404-33 [18 April 2012]

Solicitors:           Simpson Grierson, Auckland –  [email protected] and [email protected]

Crown Law Office, Wellington –  [email protected] and [email protected]

Minter Ellison Rudd Watts, Auckland –  [email protected]

Copy to:            P Davison QC, Auckland –  [email protected]

Table of Contents

Introduction  [1] Relevant provisions of the Mutual Assistance in Criminal

Matters Act 1992 and the Criminal Proceeds (Recovery)

Act 2009  [9] Grounds for the Commissioner’s application  [23] Grounds of opposition  [24] The requests for assistance  [26] Authorisation to the Commissioner  [27] Chain of command  [29]

Has the Commissioner of Police been duly authorised

by the Attorney-General?  [32] Have the requirements of s 54(2) been satisfied?  [70] Have the requirements of s 56 satisfied?  [93]

Consequences of the purported order dated 18 January

2012 being null and void  [96] Order        [100]

Introduction

[1]     By application dated 20 March 2012 the Commissioner of Police (the Commissioner) applies for an order that two restraining orders issued by the United States District Court for the Eastern District of Virginia in the United States of America, on 10 January 2012 and 25 January 2012, which restrained residential properties and personal property owned by the respondents (the foreign restraining orders) be registered in New Zealand (the application).

[2]      The application is made in reliance on ss 54 and 56 of the Mutual Assistance in  Criminal  Matters Act  1992  (MACMA)  and  s  132  of  the  Criminal  Proceeds (Recovery) Act 2009 (CPRA).

[3]      The application is supported by an affidavit and further affidavit of Peter David Marshall both sworn on 20 March 2012, and an affidavit of Cameron Mander sworn on 12 April 2012.

[4]      By notice dated 23 March 2012 the respondents oppose the application.

[5]      The  application  follows  a  previous  application  to  register  the  foreign restraining orders dated 30 January 2012 which was discontinued by notice dated 20

March 2012.

[6]      The property the subject of the foreign restraining orders is subject to an interim foreign restraining order made on 1 February 2012  pursuant to s 60 of MACMA and s 128 of CPRA.

[7]      The interim foreign restraining order is subject to conditions imposed by order of this Court on 29 February 2012 as varied by consent of the parties by order of the Court dated 21 March 2012.

[8]      The interim foreign restraining order made on 1 February 2012 has been extended by orders of the Court until 20 April 2012.

Relevant provisions of the Mutual Assistance in Criminal Matters Act 1992 and the Criminal Proceeds (Recovery) Act 2009

[9]      The short title to MACMA states that it is “An Act to facilitate the provision and  obtaining  of  international  assistance  in  criminal  matters”.    The  provisions relevant to the application are found in Part 3 of MACMA which relates to requests from foreign countries to New Zealand.

[10]     Section 54 of MACMA provides:

Request to enforce foreign restraining order—

(1)       A foreign country may request the Attorney-General to assist in enforcing a foreign restraining order that relates to property that is believed to be located in New Zealand.

(2)       The Attorney-General may authorise the Commissioner to apply to the High Court to register a foreign restraining order in New Zealand if satisfied—

(a)      that the request from the foreign country relates to—

(i)     tainted property (as defined in relation to Part 3); or

(ii)     property of a person who has unlawfully benefited from significant foreign criminal activity; or

(iii)    an  instrument  of  crime  (as  defined  in  relation  to

Part 3); or

(iv)    property that will satisfy some or all of a foreign pecuniary penalty order; and

(b)      that there are reasonable grounds to believe some or all of the property that is able to be restrained under the foreign restraining order is located in New Zealand.

(3)      An authority issued under subsection (2) must be in writing.

[11]     Section 56 relevantly provides:

Method for registering foreign orders in New Zealand

(1)      If  the  High  Court  is  satisfied  that  a  foreign  order  that  the

Commissioner has applied to register under section 54 or 551 is in

1      Section 55 relates to enforcement of foreign forfeiture orders and is not relevant here.

force in a foreign country, the High Court must make an order that it be registered in New Zealand.

…

[12]     Section  56(3)  provides  the  manner  in  which  the  foreign  order  may  be registered in the High Court.  Section 56(5) provides that a foreign order does not have effect under MACMA or CPRA until registered.

[13]     Section  57  provides  that  a  foreign  restraining  order  registered  in  New Zealand under s 56 has effect, and may be enforced, as if it is a restraining order made under CPRA.

[14]     Section 25 provides:

Requests to be made to Attorney-General

(1)       Every request by a foreign country for assistance in a criminal matter pursuant to this Part of this Act shall be made—

(a)      To the Attorney-General; or

(b)      To a person authorised by the Attorney-General, in writing, to receive requests by foreign countries under this part of this Act.

(2)       Where a request by a foreign country is made to a person authorised under subsection (1)(b) of this section, the request shall be taken, for the purposes of this Act, to have been made to the Attorney-General.

[15]     Section 26 details the form of the request.

[16]     Section 27 provides that a request from a foreign country for assistance under Part 3 may be refused if, in the opinion of the Attorney-General the request relates to an offence of a political character, or is prejudicial on account of a person’s colour, race, ethnic origin, sex, religious, nationality, or political opinions, and other similar grounds.

[17]     A “foreign restraining order” is defined in s 2(1) of MACMA as:

… an order made under the law of a foreign country by a court or other judicial authority that—

(a)       restrains a particular person, or all persons, from dealing with the property specified in the order; and

(b)      relates to—

(i)       tainted property (as defined in relation to Part 3); or

(ii)      property of a person who has, or who may have, unlawfully benefited from significant foreign criminal activity;

…

[18]     The definition of “tainted property” in relation to Part 3 of MACMA is found in s 2(1):2

…

(b)      in relation to Part 3,—

(i)       means any property that has, wholly or in part, been—

(A)      acquired as a result of significant foreign criminal activity; or

(B)      directly   or   indirectly   derived   from   significant foreign criminal activity; and

(ii)      includes any property that has been—

(A)     acquired as a result of more than 1 activity if at least

1 of those activities is a significant foreign criminal activity; or

(B)      directly  or  indirectly  derived  from  more  than  1 activity if at least 1 of those activities is a significant foreign criminal activity.

[19]     By definition in s 2(1) “significant foreign criminal activity”—

(a)       means an activity engaged in by a person in a foreign country that if proceeded against as a criminal offence in that country—

(i)       would amount to offending—

(A)     that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of

5 years or more; or

2      The definition of “tainted property” in s 5 CPRA is the same except that “foreign” does not preface “criminal activity”.

(B)      from which property, proceeds, or benefits of a value of $30,000 or more have, directly or indirectly been acquired or derived; and

(ii)      whether or not—

(A)      the person has been charged with or convicted of the offending; or

(B)     the person has been acquitted of the offending; or

(C)      the person’s conviction for the offending has been quashed or set aside; and

…

[20]     MACMA governs the steps in the process until registration of the foreign restraining order by the High Court.  At that point the relevant provisions of CPRA are engaged. They govern how the order is managed, modified and given effect to in New Zealand.

[21]     Sections 132 and 133 of CPRA provide for the Commissioner to apply to the High Court to register a foreign restraining order if authorised by the Attorney- General under s 54 of MACMA.  Section 134 of CPRA applies relevant provisions in subpart 2 of Part 2 of CPRA, which relates to restraining orders under CPRA, to applications made to register a foreign restraining order under s 54 of MACMA.

[22]     Section 135 of CPRA provides:

Effect of registering foreign restraining order in New Zealand

(1)       If a foreign restraining order is registered in New Zealand under section 56 of the Mutual Assistance in Criminal Matters Act 1992, the property specified in the foreign restraining order that is located in New Zealand—

(a)      is not to be disposed of, or dealt with, other than is provided for in the order; and

(b)      is to be under the Official Assignee’s custody and control.

(2)      If a foreign restraining order is registered in New Zealand, the Commissioner must give written notice of the order to any persons whose property is the subject of the order.

Grounds for the Commissioner’s application

[23]     The grounds stated in the Commissioner’s application for the order sought

are:

(1)On 10 January 2012 the United States District Court for the Eastern District of Virginia in the United States of America issued a post- indictment restraining order made by United States District Judge Liam O’Grady which restrained residential properties and personal properties owned by the respondents (the first foreign restraining order).

(2)On 25 January 2012 the United States District Court for the Eastern District of Virginia in the United States of America issued a post- indictment restraining order also made by United States District Judge Liam O’Grady, which restrained further residential properties and personal properties owned by the respondents  (the second foreign restraining order).

(3)An interim foreign restraining order pursuant to s 128 of CPRA was made on 1 February 2012 with respect to the properties subject to the two foreign restraining orders.

(4)The foreign restraining orders provide that no person may dispose of or otherwise deal with the restrained property while the orders remain in force.

(5)       Both the foreign restraining orders remain in force.

(6)On  16  March  2012  the  Attorney-General  (through  the  Solicitor- General’s  authorised delegate)  authorised  the Commissioner under s 54 of MACMA to apply to register the first and second foreign restraining orders.

(7)Criminal proceedings have been commenced in the United States of America against the first and second respondents.  These proceedings comprise “foreign serious offences”, and include:

(a)       Conspiracy to commit racketeering, in violation of Title 18, Unites States Code, Section 1962(d), which carries a maximum penalty of twenty years’ imprisonment;

(b)      Conspiracy to commit copyright infringement, in violation of Title 18, United States Code, Section 371, which carries a maximum penalty of five years’ imprisonment.

(c)       Conspiracy to launder monetary instruments, in violation of Title 18, United States Code, Section 1956(h), which carries a maximum penalty of twenty years’ imprisonment;

(d)      Criminal copyright infringement by distributing a work on a computer   network,   and   aiding   and   abetting   criminal copyright  infringement,  in  violation  of  Title  18,  United States Code, Sections 2 and 2319, and Title 17, United States Code, Section 506, which carries a maximum penalty of five years’ imprisonment;

(e)       Criminal copyright infringement by electronic means, and aiding and abetting criminal copyright infringement, in violation of Title 18, United States Code, Section 506, which carries a maximum penalty of five years’ imprisonment.

Grounds of opposition

[24]     The respondents’ notice of opposition states the following grounds:

(a)             There is no jurisdiction to make the order sought. (b)       Section 25(1)(b) of MACMA is not applicable.3

(c)            The respondents deny the authority of the Attorney-General to delegate his functions under s 54 of MACMA and say that neither the Attorney-General nor a duly authorised person:

(i)exercised  at  all,  or  properly  exercised  the  discretion  in s 54(2) MACMA;

3      This is not disputed. The Crown does not rely on s 25(1)(b). The requests for legal assistance in this case were made by the United States Central Authority to the Attorney-General

(ii)     satisfied himself/herself that the request from the United

States complied with s 54(2) MACMA.

(d)No or no adequate admissible evidence has been provided that the Attorney-General (or a duly authorised person) has satisfied himself/herself that the request from the United States complies with s 54(2) MACMA or the basis on which and the reasons why such a person is so satisfied, or as to whether the discretion in s 54(2) was exercised at all or properly exercised, and if exercised on what basis and for what reasons.

(e)            The applicant was not duly authorised in writing to apply to the High Court to register the foreign restraining orders pursuant to s 54 MACMA.

(f)             The High Court cannot be satisfied or properly satisfied of the matters it is required to be satisfied of before making an order under s 56(1) MACMA.

[25]     The notice of opposition also refers to the respondents’ requirement that a satisfactory undertaking with respect to payment of damages and costs be given by the applicant under s 29 and s 134 of CPRA.  Such an undertaking, dated 3 April

2012, has been given by the Commissioner.

The requests for assistance

[26]     It  is  common  ground  that  the  requests  for  assistance  from  the  Central

Authority of the United States of America dated 13 January 2012 and 25 January

20124   were made to the Attorney-General, the Hon Christopher Finlayson.   The

Crown does not rely on s 25(1)(b) of MACMA which provides for requests to be made to a person authorised in writing by the Attorney-General.

4      Exhibits PM1 and PM4 to the affidavit of Peter David Marshall dated 20 March 2012.

Authorisation to the Commissioner

[27]     The   Commissioner   acknowledges   that   the  Attorney-General   was   not personally involved in the authorisation to the Commissioner to make the application under s 54 of MACMA.5

[28]     The authorisation to the Commissioner under s 54 of MACMA to apply to the High Court to register the foreign restraining orders was given on 16 March 2012 by Mr Cameron Mander, Deputy Solicitor-General, “on behalf of the Attorney-General pursuant to ss 9A and 9C of the Constitution Act 1986”.6

Chain of command

[29]     The Crown relies for the chain of command from the Attorney-General to the

Commissioner on:

(a)           Section 9A of the Constitution Act 1986 which provides:

9A       Solicitor-General    may    perform    functions    of

Attorney-General

The Solicitor-General may perform a function or duty imposed, or exercise a power conferred, on the Attorney-General.

(b)The delegation by the Solicitor-General at the relevant time, Dr David Collins QC, to Mr Cameron Mander Deputy Solicitor- General under s 9C of the Constitution Act which provides:

9C       Delegation   of   powers   of   Attorney-General   and

Solicitor-General

(1)        The Solicitor-General may, with the written consent of the Attorney-General, in writing delegate to a Deputy Solicitor-General,   any   of   the   functions   or   duties imposed, or powers conferred, on the Attorney-General.

…

(5)      The fact that a Deputy Solicitor-General performs a function or duty or exercises a power is, in the absence of proof to the contrary, sufficient evidence of his or her authority to do so.

[30]     The Commissioner submits that the chain of command from the Attorney- General to the Deputy Solicitor-General acting under delegated authority from the Solicitor-General is a straightforward application of the Constitution Act. He submits that a duly authorised Deputy Solicitor-General has exercised the Attorney-General’s function under s 54(2) of MACMA; that by virtue of s 9C(5) of the Constitution Act, Mr Mander’s signature provides prima facie evidence of his authority to so act; but in any event the formal delegation is before the Court.7

[31]     The respondents submit:

(a)       The request by the US authorities was to the Attorney-General.8

(b)It is the Attorney-General (or a person authorised by him in writing to receive such requests under s 25(1)(b) of MACMA) who must satisfy himself/herself of the requirements of s 54(2) of MACMA.

(c)      These are civil proceedings: s 10 (1)(h) of CPRA.   The applicant’s reliance on the constitutional convention that except in truly exceptional circumstances, it is never appropriate for the Attorney- General to exercise statutory powers conferred on him, but rather to leave  decisions  regarding  the  exercise  of  these  powers  to  the Solicitor-General or his delegate, relates to criminal matters, but not to civil proceedings.

(d)The Attorney-General’s function is pivotal as a safeguard against what could amount to arbitrary and oppressive conduct arising out of the registration of a foreign restraining order made overseas on an ex parte  basis.    In  addition,  the  grounds  for  refusal  under  s  27  of MACMA are highly political in nature and should be considered by

the Attorney-General.

(e)      There  is  no  evidence  that  it  is  administratively  necessary  for  the Solicitor-General or his Deputy to exercise the powers under s 54 of MACMA.   The effect of s  25 is to establish a specific decision- making regime whereby decisions must be made by either the Attorney-General personally or by a person specifically authorised pursuant  to  s  25(1)(b).    Section  25  cannot  be  circumvented  by recourse to more general powers in the Constitution Act.   Any delegation  by  the  Attorney-General  must  be  made  specifically pursuant to s 25(1)(b).

(f)      There is no evidence before the Court that the Attorney-General, or a duly authorised person, has satisfied himself/herself that the request from the United States central authority complies with s 54(2) of MACMA, or the reasons why such a person is satisfied.

(g)The Attorney-General (or a duly authorised independent person) is required to carry out an analysis pursuant to the New Zealand Bill of Rights Act.   Section 21, the right to be secure against unreasonable search or seizure of property, is particularly relevant in the present case. There is no evidence that this has been done.

(h)The  application  for  registration  of  the  foreign  restraining  orders should be dismissed.

Has the Commissioner of Police been duly authorised by the Attorney-General?

[32]     Section  54(1) provides  that  a foreign  country may request  the Attorney- General to assist in enforcing a foreign restraining order that relates to property that is believed to be located in New Zealand.

[33]     Under s 25 that request is to be made to the Attorney-General or to a person authorised in writing by the Attorney-General.  Under s 25(2) if the request is made

to a person authorised by the Attorney-General it is to be taken to have been made to the Attorney-General.

[34]     In this case the requests under s 54(1) were made by the United States Central Authority to the Attorney-General on 13 January 2012 in relation to the first foreign restraining order and 25 January 2012 in relation to the second restraining order.

[35]     Section 25 relates to requests by a foreign country for assistance in a criminal matter.  It designates the Attorney-General or his delegate as the recipient for such requests.  It does no more.  It does not require or authorise the Attorney-General or his delegate to do anything in relation to a request.  I do not accept the respondents’ submission that by designating the Attorney-General or his delegate as the recipient for such requests, it is to be inferred that the Attorney-General has a personal role which only he can perform in the steps that follow the receipt of such a request under MACMA.

[36]     Further, while the respondents seek to rely on their submission that these are civil proceedings,9  they also maintain that s 25, which relates to requests in criminal matters, establishes a specific decision-making regime which involves the Attorney- General personally.10   These submissions are contradictory.

[37]     Under  s  54(2)  the Attorney-General  may  authorise  the  Commissioner  to apply to the High Court to register a foreign restraining order if satisfied as to the matters set out in that subsection.

[38]     In this case the authorisation to the Commissioner was given by the Solicitor- General to Mr Cameron Mander, the Deputy Solicitor-General, on 16 March 2012. He acted under powers of delegation pursuant to ss 9A and 9C of the Constitution Act 1986 as set out above.11

[39]     The intermediate person in the chain of command between the Attorney- General and Mr Mander is the Solicitor-General who by s 9A has authority to

9 See [31](c) above. See also [52] below.

10 See [31] above.

perform “… a function or duty imposed, or exercise a power conferred” on the

Attorney-General.

[40]     The Solicitor-General in turn delegated the powers of the Attorney-General and himself to Mr Mander as Deputy Solicitor-General under s 9C(1) by written delegation dated 25 January 2007 approved, as required by s 9C, by the Attorney- General (then Hon Dr Michael Cullen).

[41]     There  is  nothing  in  the  legislative  provisions  that  requires  the Attorney- General to be personally “satisfied” under s 54(1) before authorisation to the Commissioner is given.  In my view, no criticism can properly be made of what the Crown describes as “an unremarkable exercise of a properly delegated authority”.

[42]     The respondents were not able to point to any authority in support of their submissions.   They referred  to  two  cases.    The  case  of  Bujak  v The  Solicitor- General12  concerned whether the order of a Polish Court that referred to “seizure” of assets was  a restraining order under MACMA.   The Supreme Court  noted that MACMA constituted New Zealand’s response to the United Nations Model Treaty on  Mutual Assistance  in  Criminal  Matters.    The  mere  reference  in  [10]  of  the judgment to the fact that under s 55 of the Act (the predecessor of s 54 before the

2009 amendments to MACMA), “… the Attorney-General may authorise the Solicitor-General in writing, to apply to the High Court for the registration of the order” does not provide support for the respondents’ submissions.  Under s 55 it was the Solicitor-General instead of, under s 54, the Commissioner of Police, whom the Attorney-General could authorise to apply to the High Court to register a foreign restraining order.  The Supreme Court was merely stating that provision.  The Court was not concerned with any issue of delegation by the Attorney-General.

[43]     Nor do I consider the decision of the High Court of Australia in Minister for Aboriginal Affairs v Peko-Wallsend Ltd13 supports the respondents’ position. The Aboriginal Land Rights (Northern Territory) Act 1976 with which the High Court of

Australia was concerned, was entirely different from MACMA.   In reaching the

12     Bujak v The Solicitor-General [2009] 3 NZLR 179.

13     Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24.

conclusion that the Minister’s function under s 11 of the Act was to be exercised by him personally unless he delegated it pursuant to a specific provision in the Act, and that the Minister’s function under s 11 was “a central feature of the statutory scheme”,14  the Court took into account, among other things, the preliminary procedures for which the Act made provision – the holding of an inquiry under s 50 by the Commissioner who is a Judge of the Supreme Court of the Northern Territory, the making by him of a report to the Minister which, if the power under s 11 was to be exercised, had to contain a recommendation that the land should be granted to a Land Trust for the benefit of Aboriginals, and finally that “the Minister is satisfied” that the land or part of it should be granted to the Land Trust or Trusts.

[44]     I do  not agree with the respondents’ submission that in like manner the Attorney-General’s function under MACMA is pivotal, as a safeguard against a possibly arbitrary and oppressive foreign restraining order.  The matters upon which the Attorney-General is required to be satisfied under s 54(2) are relatively routine.  I refer to these later in this judgment.

[45]     Of more, if limited relevance, is the judgment of the Court of Appeal in Ibbetson  v  R15    which  concerned  a  very  similar  issue  involving  s  9A  of  the Constitution Act.

[46]     One of the issues in Ibbetson v R was whether s 144 of the Films, Videos, and Publications Classification Act 1993 required the Attorney-General to personally grant leave to prosecute:

144     Leave of Attorney-General to prosecute

(1)       No prosecution for an offence against any of sections 123 to 129 of this Act or against section 131 or section 131A or section 133 of this Act  shall  be  commenced  except  with  the leave  of the Attorney- General.

(2)       The Attorney-General  may  delegate  the  powers  of  the Attorney- General under subsection (1) of this section to the Commissioner of Police in respect of offences concerning any particular class of publications.

…

(5)      No  such  delegation  shall  prevent  the  exercise  by  the  Attorney- General of any power under subsection (1) of this section.

[47]     The Solicitor-General gave leave to commence the prosecution under s 9A of the Constitution Act.16

[48]     The applicant submitted that s 9A did not apply to s 144, because s 144 created a mandatory requirement and the granting of leave pursuant to s 144 is not a “function or duty imposed” or the exercise of a power.  No authority was presented in support of this proposition.17

[49]     The Court of Appeal described this argument as “plainly wrong”.  The Court noted that s 144(5) expressly recognises that granting leave under s 144(1) involves the exercise of a power.  The Court was satisfied that the Solicitor-General had the power to grant leave.18

[50]     In  their submissions  dated 29  March  2012,  the respondents  contend that

(citations omitted):

The effect of section 25 is to establish a specific decision making regime whereby decisions must be made by either the Attorney-General personally or by a person specifically authorised pursuant to section 25(1)(b).  Section

25  cannot  be  circumvented  by  recourse  to  more  general  powers  in  the

Constitution  Act.     This  does  not  prevent  the  Attorney-General  from delegating the decision-making power, but requires that any delegation be made specifically pursuant to section 25(1)(b).

[51]     This is a similar argument to that made in Ibbetson v R.  In Ibbetson v R, it was  argued  that  the  relevant  section  created  a  mandatory  requirement  and  the granting of leave did not fit within the definition of s 9A of the Constitution Act. The Court of Appeal did not address the first part of the argument, but as I have noted above,19  s 25 simply designates the Attorney-General, or his authorised delagatee, as the recipient for requests for assistance from foreign countries.   In

Ibbetson v R the Court of Appeal focussed on whether the actions came within the

16 See at [28] above.

17     At [13]-[14].

18     At [15]-[17].

19     At [35] above.

ambit of s 9A of the Constitution Act, but it may be inferred that the Court did not consider s 144 created a mandatory requirement that the Attorney-General was the only person who could exercise power under s 144 and that any delegation had to occur under the specific delegation provision.

[52]     The significance the respondents seek to attach to proceedings for registering a foreign restraining order being civil proceedings by reason of s 10(1)(h) of CPRA is misplaced.  Section 2B of MACMA deems certain civil proceedings to be criminal proceedings, including in subsections (3) and (4):

(3)       A proceeding certified by the Central Authority of the requesting country to have been instituted in respect of the forfeiture or restraint of property that is, or is suspected on reasonable grounds to be or to be likely to be, any of the things referred to in subsection (4) must be treated as a criminal proceeding despite being civil in nature.

(4)      The things referred to in subsection (3) are—

(a)      tainted property (as defined in relation to Part 3); or

(b)      property  of  a  person  who  has  unlawfully  benefited  from significant foreign criminal activity; or

…

[53]     Further, as the Crown observed in submissions, the relevant statute is the Mutual Assistance in Criminal Matters Act, and as noted in Bujak v The Solicitor- General20  the Act constitutes New Zealand’s response to the United Nations Model Treaty on mutual assistance in criminal matters.21     The proceeding is ancillary and closely related to an underlying criminal prosecution.   As the Crown points out, however categorised, whether civil or criminal, political independence in criminal proceedings in mutual assistance matters is every bit as acute as in other parts of the criminal justice system.   Sections 9A and 9C do not distinguish between civil and criminal matters and apply in relation to both.

[54]     Mr Boldt, counsel for the Crown, explained in submissions the rationale for the authorisation being issued from within the Crown Law Office, namely by the Deputy Solicitor-General rather than by the Attorney-General himself.

[55]     He referred to the unshaken constitutional convention that, except in truly exceptional  cases,22   it  is  never  appropriate  for  the Attorney-General  to  exercise statutory powers conferred on him in criminal matters, but rather to leave decisions regarding the exercise of these powers to the Solicitor-General or his delegate.

[56]     He noted the “highly authoritative article” by Mr J J McGrath QC (now the Hon Justice McGrath a Judge of the Supreme Court) while he was still serving as Solicitor-General,  published in  the  December  1998  edition  of the New  Zealand University Law Review.23

[57]     Mr McGrath observed:

The statutory pattern is to place responsibility for the Government’s role in the administration of criminal justice on the Attorney-General. This includes responsibility for prosecution of serious crime, the power to terminate any prosecution, and the power to give any witness at a trial immunity from prosecution.   However, the Solicitor-General, appointed as a non-political Law Officer, is also given statutory power to exercise all these functions.  By convention, and in order to make it plain that criminal justice is, in New Zealand, administered free from political direction or influence, successive Attorneys-General have increasingly left this area to the Solicitor-General. Indeed,  as  will  be  discussed  later,  Parliament  has  now  precluded  the Attorney-General from being involved in some decisions relating to criminal justice such as appeals against sentence considered to be unduly lenient.

[58]     In November 1999 ss 9A and 9C were inserted in the Constitution Act 1986, providing clear statutory authority for the Solicitor-General to perform functions of the Attorney-General and for delegation of the powers of the Attorney-General and Solicitor-General.24

[59]     In   2000   the   Law   Commission   observed   in   its   report   on   Criminal

Prosecution:25

22     He referred to the decision to stay proceedings in 1991 arising from the sinking of the Rainbow Warrior.  This case raised issues of New Zealand’s diplomatic and economic relationships with other countries.  Counsel noted that this was the only example in recent memory in which the Attorney-General had taken such a decision in relation to a criminal process.

23     John McGrath QC “Principles for Sharing Law Officer Power – the Role of the New Zealand

Solicitor-General” (1998) 18 NZULR 197.

24     Section 3 of the Constitution Amendment Act 1999 (1999 No 86).

25     Law Commission Criminal Prosecution Report (NZLC R66, 2000).

[36]      Section 9A of the Constitution Act 1986 provides that the Solicitor- General may perform a function or duty imposed, or exercise a power conferred, on the Attorney-General.   It is an established constitutional convention that the Solicitor-General is a non-political appointment, because independence from Government is essential for the proper exercise of the Solicitor-General’s duties.

[37]    By long-standing convention successive Attorneys-General have generally not personally undertaken prosecution decisions or Law Officer decisions  in  relation  to  criminal  proceedings,  but  have  left  them to  the Solicitor-General.   The reason for the convention is to prevent the administration of the criminal law becoming a matter of political decision making.   So the Solicitor-General, as head of the Crown Law Office, is responsible for supervision of criminal prosecutions.  This includes granting consent to the commencement of certain types of prosecution, entering staying of proceedings, granting immunities from prosecution (including in relation to extradition and criminal mutual assistance) and granting leave to prosecute under various statutes.  It also includes oversight of the work of Crown Solicitors.

[38]      Instances  where  the  Attorney-General,  rather  than  the  Solicitor- General becomes directly involved in decisions in individual cases are few, but do sometimes occur…26

[60]     Mr McGrath’s article has been cited with approval in a number of cases: Attorney-General v District Court in New Plymouth & Anor,27 Moodie v Lithgow,28 R v King29 and Berryman v Solicitor-General.30

[61]     In Moodie v Lithgow Panckhurst J, after referring to Mr McGrath’s article,

said:

[57]     New  Zealand  has  effected  its  own  division  of  responsibilities between the Law Officers.  Because the office of Attorney-General is held by a politician, it is an established convention in this country that the Solicitor-General assumes responsibility in relation to both the conduct of criminal  prosecutions  and  contempt  generally.    Section  9A provides  the vehicle for this to occur.

[62]     By the 1999 amendment to MACMA31 s 54 was substituted, providing for the

Commissioner to be the person authorised to apply to the High Court to register a foreign  restraining order.    Previously under s  55  of MACMA the person  to  be

26     The Law Commission refers to the Rainbow Warrior case in this context.

27     Attorney-General v District Court at New Plymouth & Anor HC New Plymouth, M19, 11 July

2001.

28     Moodie v Lithgow HC Wellington CIV-2006-485-1732, 1 September 2006.

29     R v King [2007] 2 NZLR 137 at [24].

30     Berryman v Solicitor-General [2005] NZAR 512 at [34] and [35].

authorised by the Attorney-General to make such an application was the Solicitor- General.   The 1999 amendment released the Solicitor-General to perform his constitutional   functions  under  MACMA  in   relation   to   restraining  orders  in accordance with the constitutional convention to ensure that the statutory powers are, and are seen to be, administered free from political direction or influence.

[63]     The Commissioner must act independently in relation to any application he is authorised to make under s 54.  Section 92 of CPRA provides:

92       Independence

(1)       In any matter relating to any decision to … take any proceedings under this Act, the Commissioner is not responsible to the Attorney- General or any other Minister of the Crown and must act independently.

…

[64]     The 2009 amendment which substituted s 54 did not change the decision- maker.  This was the Attorney-General under the previous s 55 and continues to be the Attorney-General under s 54.   But by removing the Solicitor-General as the applicant to the High Court he was released to perform his normal constitutional functions and avoid involvement by the Attorney-General in what is a criminal process.

[65]     Likewise the Solicitor-General performs a conventional role in relation to s 27 under which a request by a foreign country for assistance may be refused.  The grounds for refusal are focused on the specific offence to which the request relates except in the case of s 27(1)(f) which concerns prejudice to the sovereignty, security, or national interests of New Zealand.   The Solicitor-General will perform the functions and powers conferred by s 27 on the Attorney-General except in a rare case involving New Zealand’s national interests.  Again, the Rainbow Warrior case is the example given.

[66]     Thus,  the  personal  and  direct  involvement  of  the  Attorney-General  in decision-making under s 54 as advanced by the respondents, would have breached a well established and important convention and may have given rise to an appearance of political involvement in a process where the absence of political influence is

crucial.  The involvement of the Attorney-General in such decision-making is neither appropriate or necessary and is inconsistent with the role of the Attorney-General in the wider criminal justice system.

[67]     Further, as Mr Akel accepted in the course of oral submissions, the position advocated by the respondents would require the Attorney-General to be involved in decision-making not only under s 54, but in relation to the numerous other types of request that may be made under Part 3 of MACMA.   These include assistance in locating or identifying persons believed to be in New Zealand, obtaining evidence in New Zealand, obtaining attendance of persons to give evidence or assistance in relation to criminal matters in a foreign country, and attendances of prisoners in a foreign country.  It is not credible to suggest that the Attorney-General should, or for that matter could, be personally involved in relation to such a range of mundane functions.  Further, to do so would be inconsistent with his constitutional role in the justice system.

[68]     In  this  case  the  Crown  relies  on  a  general  delegation  in  favour  of  the Solicitor-General under s 9A of the Constitution Act and on a subsequent power of delegation by the Solicitor-General to the Deputy Solicitor-General under s 9C. Authorisation by the Attorney-General of the Commissioner to apply to the High Court to register a foreign restraining order under s 54(2) is clearly the exercise of a function or power and therefore within the general powers of delegation under ss 9A and 9C of the Constitution Act.

[69]     I find that the Commissioner of Police has been duly authorised by a duly authorised delegate of the Attorney-General to apply to the High Court to register the foreign restraining orders.

Have the requirements of s 54(2) been satisfied?

Background and statutory framework

[70]    MACMA provides a framework within which the Attorney-General (or delegate)  considers  various  procedural  and  substantive  factors  when  deciding whether to grant authorisation.   The substantive parameters of his assessment are defined by ss 27 and 54(2), with other sections governing a request that does not provide the required information or is not in the correct form,32  or that the Attorney- General wishes to allow subject to conditions.33

[71]     Section 27 provides the only mandatory list of factors which, if present, oblige the Attorney-General to refuse the request.  These factors relate to matters of policy, for example where the request is political or prejudicial, prejudices a person’s safety,  compromises  New  Zealand’s  security interests  or  ongoing  investigations, places an excessive burden on New Zealand’s resources, or relates to an action that is not an offence in New Zealand.

[72]     Besides s 27, the Attorney-General must consider the threshold requirements in s 54(2): that the request relates to tainted property, or property of a person who has unlawfully benefitted from significant foreign criminal activity, or an instrument of crime, or property that will satisfy some or all of a foreign pecuniary penalty order. Secondly,  that  there  are  reasonable  grounds  to  believe  that  some  or  all  of  the property that is able to be restrained under the order is located in New Zealand.  If the   Attorney-General   is   satisfied   of   these   matters,   he   may   authorise   the Commissioner to apply to the High Court to register the foreign restraining order.34

[73]     In the authorisation to the Commissioner of Police to apply to register a foreign restraining order, Mr Cameron Mander, exercising the powers of the Attorney-General, refers to the requests from the United States of America under

s 54 of MACMA in relation to the foreign restraining orders made on 10 January

32 See for example s 26.

33 Section 29.

34 See [10] above.

2012 and 25 January 2012, relating to property of the first and second respondents that is believed to be located in New Zealand, and says:

I am satisfied—

(a)       that the requests from the foreign country relate to:

(i)       tainted  property  (as  defined  in  relation  to  Part  3  of  the

Mutual Assistance in Criminal Matters Act 1992); and/or

(ii)      property  of  a  person  who  has  unlawfully  benefited  from significant foreign criminal activity; and

(b)       that there are reasonable grounds to believe that some or all of the property that is able to be restrained under the foreign restraining orders is located in New Zealand.

and in my opinion nothing in the Mutual Assistance in Criminal Matters Act

1992 precludes the granting of this request.

[74]     He then authorises the Commissioner to apply to the High Court to register the foreign restraining orders in accordance with s 133 of CPRA.   On 20 March

2012, the Commissioner applied to the High Court.

[75]     The  primary  evidence  upon  which  Mr  Mander  relied  in  authorising  the

Commissioner to apply to the High Court, as confirmed in his affidavit dated 12

April 2012, is set out in the affidavit of Peter David Marshall dated 20 March 2012. Mr Marshall is assistant Crown counsel in the criminal team of the Crown Law Office and states he is authorised by Crown Law to swear the affidavit.  He confirms that the following documents have been received by the Crown Law Office from the United States, these documents being exhibited to his affidavit:

(a)      A request dated 13 January 2012 for legal assistance from the Central Authority of the United States of America (the Department of Justice) seeking the restraint of assets in New Zealand.

(b)A foreign restraining order dated 10 January 2012 (the first foreign restraining order) issued by the United States District Court for the Eastern District of Virginia.

(c)      An affidavit by Mr J  Prabhu, Assistant United States Attorney in support of the foreign restraining order.

(d)A request dated 25 January 2012 for legal assistance from the Central Authority of the United States of America (the Department of Justice) seeking the restraint of further assets in New Zealand.

(e)      A foreign restraining order dated 25 January 2012 (the second foreign restraining order), issued by the United States District Court of the Eastern District of Virginia.

Submissions

[76]   The respondents make four main submissions regarding Mr Mander’s authorisation to the Commissioner and therefore the Commissioner’s application to this Court:

(a)      Before registering the order, the Court must scrutinise Mr Mander’s reasoning and the evidence upon which he relied;

(b)Mr Mander had an obligation to carefully assess the background to these proceedings and the evidence that was placed before the Grand Jury;

(c)      There is no reliable evidence that Mr Mander properly exercised his discretion  by  satisfying  himself  that  the  request  complied  with s 54(2), or if he did, he did not provide reasons for why he was satisfied; and

(d)      The evidence that was provided does not meet the requirements of s 54(2).

[77]     The respondents note that the only evidence Mr Mander has provided is a standard form document stating that he is satisfied that the s 54(2) requirements have

been met without providing reasons for this, or detailing the enquiries that were made.    The  only  evidence  as  to  the  substance  of  his  decision  is  found  in  Mr Marshall’s affidavit, which sets out the materials that were provided by the United States authorities in support of the application.   The respondents submit that in addition to being hearsay evidence (though this has subsequently been rectified by the Crown),35 this document is circular as it uses the evidence recorded in the restraining orders themselves as evidence that the s 54(2) requirements have been met, and does not set out reasons for his conclusion or record any assessment or enquiries that he carried out.  The respondents contend that the provision of reasons for the exercise of discretion is an established requirement for this type of decision.

[78]     The respondents further submit that particular attention must be given to ensuring that the request and the evidence upon which it is based is consistent with the New Zealand Bill of Rights Act, as the Attorney-General’s role provides an important safeguard against arbitrary and oppressive conduct.  Ensuring that the Bill of Rights Act has been properly complied with is a prerequisite to the application to register the order and hence the Court must ensure that the decision-maker has considered this.  Here, such an analysis would focus on the proportionality of large scale restraint and seizure without trial and whether this can be demonstrably justified.  The respondents suggest that if such an analysis had been carried out, the respondents’ property would not have been seized.

[79]     Finally, the respondents say there is no record as to what evidence was placed before the Grand Jury and how this evidence was selected.   The ramifications are important, because Mr Mander considered that the request related to tainted property and the property of a person who has unlawfully benefitted from significant foreign criminal activity.

[80]     They say these  concepts  assume that  there  has  been  “significant  foreign criminal activity” as defined in s 2(1), and therefore require proof being placed before Mr Mander (and evidence of that proof being placed before the Court) that

there has actually been significant criminal activity.  Instead, there is evidence that

35     In  Mr  Mander’s affidavit dated  12 April  2012,  he  confirms that  he  considered all  of  the documents listed in Mr Marshall’s affidavit and that this was the only primary material before him.

the Grand Jury found “probable cause” (defined as reasonable grounds to believe, amounting to more than mere suspicion), that the statutory elements are satisfied and that a sufficient nexus exists between the property and the violation.  In support of their interpretation, the respondents note that the definition of “significant foreign criminal activity” is the same as that applying to a foreign forfeiture order.   They contrast the definition with the wording in s 60(2), which applies to interim foreign restraining orders, and requires the Attorney-General to be satisfied that “there is a criminal investigation in relation to” tainted property etc.  The respondents submit that if Mr Mander had considered the definition of “significant foreign criminal activity” he would not have been satisfied that the request related to tainted property and/or  the property of  a person who has  unlawfully benefitted  from  significant foreign criminal activity, and would not have authorised the present application.

[81]     The respondents submit in conclusion that the request to register the order has been issued “without any independent inquiry as to whether it is right and proper to do so” and that therefore “the Court cannot be satisfied that the request from the US Central Authority, and the subsequent authorisations to the Commissioner have not simply been ‘rubber stamped’ and actioned by Crown Law.”

[82]     The applicant simply responds that the Court could only undertake an enquiry into the merits of Mr Mander’s decision in a judicial review proceeding; and that it has no jurisdiction to do so here.

Analysis

[83]     There is no requirement in s 54 that the Attorney-General give reasons for being satisfied as to the matters specified in subsection (2).   He must merely be satisfied as to those matters and authorise the Commissioner in writing.36     Further, there is no jurisdiction in s 56 for the Court to require such reasons to be given, or even to look beyond the face of the Attorney-General’s authorisation and the Commissioner’s application.  Once the Commissioner has made the application, the Court must register the restraining order if it is satisfied that the order is in force in a

foreign country.

36 Section 54(3).

[84]     However, the respondents submit that because s 54(2) requires “significant foreign  criminal  activity”,  and  because  the  s  2(1)  definition  assumes  that  such activity has taken place, the Attorney-General must assess whether the evidence establishes to a sufficiently high standard that such activity has taken place when making his decision under s 54(2).  The respondents then submit that the Court must ensure that this process has been followed when ordering the registration of a foreign order.   In this way, the respondents effectively extrapolate the jurisdiction of the Court to inquire into these matters from ss 54(2) and 56, as informed by s 2(1).

[85]     This  interpretation  adds  an  extensive substantive overlay to  the statutory parameters  of  the  Court’s  role  in  these  proceedings.  Section  56(1)  provides  as follows:

If the High Court is satisfied that a foreign order that the Commissioner has applied to register under section 54 or 55 is in force in a foreign country, the High Court must make an order that it be registered in New Zealand.

[86]     This mandatory provision provides both the source and the sole guidance for the exercise of the Court’s power in registering the foreign order. The respondents’ interpretation essentially reads in authority for the Court to assess the correctness or appropriateness  of  the Attorney-General’s  authorisation  and  the  Commissioner’s application and, through these, the merits of the underlying foreign decision.  In the absence of any provision to indicate that the Court should undertake an assessment of the merits, this interpretation goes beyond the clear intention of s 56 that the Court confirms that the technicalities of the process have been observed.

[87]     This is supported by the wider statutory framework. Together, MACMA and CPRA create a framework for the registration of foreign restraining orders.  Three entities are able to exercise discretion within this framework: the foreign jurisdiction in making the restraining order and requesting assistance with its enforcement; the Attorney-General in authorising the Commissioner to apply for registration; and the Commissioner in applying to the High Court.  The High Court is the final participant in the scheme and the only entity whose function is described in narrow, mandatory language.  The High Court’s assessment of the evidence is limited by the words of s 56 to it being “satisfied that a foreign order that the Commissioner has applied to register ... is in force in a foreign country”.  The respondents’ characterisation of the

Court’s role seeks to have the Court ensure that the application has been properly made and thereby require evidence that allows it to examine the original decision through each succeeding exercise of discretion. This is a significant expansion of the Court’s role, particularly considering that it is the only participant in the registration procedure that lacks discretion and flexibility and cannot require further evidence.

[88]     This  interpretation  answers  the  respondents’ submission  that  Mr  Mander could not have been satisfied that the request satisfied s 54(2) because the definition of “significant foreign criminal activity” requires proof that significant criminal activity has actually taken place.   There is no authority for this Court in these proceedings to consider the merits of Mr Mander’s decision in its consideration of the s 56 threshold.

[89]     In any case, the s 2(1) definition of “significant foreign criminal activity” expressly states that there is no requirement that the person be charged with or convicted of the offending.  The respondents do not consider this undermines their interpretation, merely meaning that it is not necessary to secure a conviction to prove “significant foreign criminal activity”.  However, the nature of a restraining order is to hold assets that may be subject to subsequent forfeiture, pending the outcome of a trial. Such an order could only be made on the preliminary evidence that reaches the standard  required  to  issue  the  order  in  the  United  States.    In  that  context,  the definition of “significant foreign criminal activity” cannot be interpreted to require proof to a standard greater than that required in the foreign jurisdiction for the restraining orders.

[90]     It cannot be seriously argued that the Attorney-General is required to consider the record of the evidence that was placed before the Grand Jury and  how this evidence was selected, as the respondents contended.   Even if this were possible, there is nothing in MACMA that suggests that the Attorney-General should request or  can  require  this  information.    While  the Attorney-General  retains  a  residual discretion as to whether to grant the order, the envisaged basis upon which he may exercise that discretion relates to New Zealand’s legal system and national security. This accords with the overall scheme, in which New Zealand authorities assist the law enforcement of foreign countries (absent reasons to refuse this assistance) in the

interests of international comity.  In contrast, the respondents’ interpretation would require the Attorney-General to re-determine the evidence that was before the Grand Jury and possibly request further evidence.

[91]     The respondents’ concern that the restriction of the Court’s role to ensuring that the Commissioner has followed the correct procedure undermines the safeguards in the process is misplaced.  The respondents have potential rights of review against the three entities that exercise discretion: the original decision may be challenged in the substantive proceedings in the United States or through related proceedings; and, as noted by the applicant, the decisions made by the Attorney-General (and probably the Commissioner) may be the subject  of judicial  review in  New  Zealand.    In particular, the absence of reasons for Mr Mander’s decision and his consideration of the Bill of Rights Act may properly be the subject of judicial review.  Registration of an order that has no error on its face does not deprive the respondents of a right to review these matters.

[92]     I conclude that, having been duly authorised by the Attorney-General, the Commissioner has made application for registration of the foreign restraining orders in accordance with s 54(2).

Have the requirements of s 56 been satisfied?

[93]     Before granting the Commissioner’s application for an order that the two restraining orders be registered in New Zealand, this Court must be satisfied that the foreign restraining orders the Commissioner has applied to register are in force in the United States of America.   If so satisfied, the Court must grant the application for registration.

[94]     I am satisfied that the first foreign restraining order dated 10 January 2012 and  the  second  foreign  restraining  order  dated  25  January  2012  are  foreign restraining orders in terms of s 2 of MACMA because:

(a)       They were made under the law of the United States of America by a

Court of competent jurisdiction; and

(b)They restrain the persons to whom they are directed from dealing with bank accounts, cars and other property specified in the orders;

(c)      They relate to tainted property and/or property of a person who has, or may have, unlawfully benefited from significant foreign criminal activity.

[95]     I am satisfied that the foreign restraining orders remain in force on the basis of the following evidence:

(a)       The orders each state “The terms of this Order shall remain in full

force and effect until further Order of this Court”; and

(b)Peter David Marshall in an affidavit sworn 4 April 2012 attests that on Wednesday 4 April 2012 a letter was received by Anne Toohey of the Crown Law Office in Wellington from Ryan Dickey of the United States Department of Justice in which Mr Dickey confirms that the two restraining orders are still in force and further confirms that the United States authorities will inform the Crown Law Office promptly if the orders are vacated or otherwise altered.  A copy of Mr Dickey’s letter is exhibited to Mr Marshall’s affidavit.

Consequences of the purported order dated 18 January 2012 being null and void

[96]     In my judgment dated 16 March 2012, I declared that the order of this Court dated 18 January 2012 for the registration of a foreign restraining order is null and void and has no legal effect.

[97]     On 30 January 2012 the Commissioner made a without-notice application for an Interim Foreign Restraining Order which related to the property the subject of the previous application that led to the purported order of 18 January 2012, and other property of the respondents. This application was granted on 1 February 2012.

[98]     In  my  judgment  of  16  March  2012  I  noted  that  the  parties  had  made submissions to the Court on the consequences of the 18 January 2012 order being null and void.   I said  I would address those  submissions in the context of the Commissioner’s application to register the foreign restraining orders.

[99]     This judgment addresses the various arguments raised by the respondents which have continuing relevance.  However, as to the consequences of the order of

18 January 2012 being null and void I make the following observations:

(a)      Because the order of 18 January 2012 is null and void and of no legal effect, the Court had jurisdiction to make the interim foreign restraining  order  on  1  February 2012  relating  to  the  respondents’ property in New Zealand.

(b)       When the police seized and restrained property of the respondents on

20 January 2012 they could not claim authority to do so in reliance on the order purportedly made on 20 January 2012 (which has subsequently been declared null and void).

(c)      The respondents may have remedies at public law in relation to the alleged unlawful and unreasonable seizure on 20 January 2012 and restraint between 20 January 2012 and 1 February 2012 of property of the respondents, but these are not matters before this Court. Any such rights or remedies could not form part of the considerations in this judgment. They are properly the subject of separate procedures.

(d)       The Crown has now provided an undertaking as to damages dated 3

April 2012 which Mr Akel confirmed to the Court, meets the requirements of the respondents.

Order

[100]   Being satisfied in terms of s 56 of MACMA that the foreign restraining orders issued by the United States District Court for the Eastern District of Virginia in  the  United  States  of  America  on  10  January  2012  and  25  January  2012 respectively relating to assets of the respondents located in New Zealand in force, I order that the foreign restraining orders be registered in New Zealand subject to:

(a)       The conditions set out in the orders of this Court made on 29 February

2012 and 21 March 2012 as set out in the Schedule annexed; and

(b)Leave  being  reserved  to  the  respondents  with  the  consent  of  the applicant to apply for further conditions as referred to in paragraph 4 of the respondents’ notice of opposition  dated  23  March  2012  in relation  to  payments  to  be met  out of the respondents’ restrained property for:

(i)        payment of debts incurred by the respondents; (ii)      payment of the respondents’ legal expenses;

(iii)      such further expenses as may be allowed by the Court.

SCHEDULE

Conditions to which the restraining orders are subject as ordered by the Court on 29

February 2012:

a)       To  the  second  respondent  Bram  Van  Der  Kolk  there  are  to  be released:

i)$10,000 for living expenses from funds held by the Official Assignee having been derived from funds in his bank account at HSBC (item 3 at paragraph 1(a) of the order).

ii)       2005 Mercedes-Benz A170 motor vehicle registration number

FUR 252 (item 21 at paragraph 1(b) of the order).

b)To Megastuff Ltd there is to be released approximately $74,000 from funds held by the Official Assignee being derived from funds in the Bank  of  New  Zealand  and  Kiwibank  accounts  of  Megastuff  Ltd (items 1 and 2 at paragraph 1(a) of the order).  These funds are to be applied in payment pro rata of the creditors of Megastuff Ltd amounting to approximately $550,000.  In the first instance the funds are to be paid by the Official Assignee to the trust account of Simpson Grierson Butler White for disbursement as aforesaid, subject to any variation subsequently ordered by the Court.

c)       To Mrs Dotcom from the funds held by the Official Assignee there are to be released:

i)        $12,650 for medical expenses;

ii)       $20,000 for living expenses;

iii)2010 Toyota Vellfire motor vehicle registration number WOW (item 16 at paragraph 1(b) of the order).

[2]      Conditions to which the restraining orders are subject as ordered by the Court on 21 March 2012:

a)       The Official Assignee will release, to a bank account in the name of the First Respondent or the Interested Party or to the Interested Party's solicitors' trust account (whichever is requested by the Interested Party):

i)the  sum  of  $20,000   per  month  for  living  expenses  in satisfaction  of the First  Respondent's  and  Interested  Party's applications for living expenses pursuant to section 28(1)(a) of the Criminal Proceeds (Recovery) Act 2009.  Such sums are to be  derived  from  interest  on  the  NZ$10,000,000  in  New Zealand Government Bonds, being item 3 on page 3 of the order of 29 February 2012.  The first monthly payment is to be paid on 23 March 2012, and backdated to 1 March 2012. Thereafter, each monthly payment is to be paid on the 15th of each month;

ii)The funds restrained by the Official Assignee in or from the RaboDirect account number 03-1791-0122323-00 in the name of Kim Dotcom, in the sum held as at 1 February 2012 ($301,758.70) are to be released from the scope of the order of

29 February 2012 pursuant to s 35(a) of the Criminal Proceeds (Recovery) Act 2009, in maximum instalments of $40,000 per month, such payment to be made by the Official Assignee.  In addition, the Official Assignee will make a one-off payment into that account, from the interest on the Government Bonds referred to above, sufficient to increase to $301,758.70 the amount available for release under this order.

b)The   First   Respondent   and   Interested   Party  may  make  further applications for any matter other than living expenses.   The orders

made above may be taken into account if further applications are made;

c)        The 2011 Mercedes Benz G55AMG vehicle (VIN WDB463Z702X

191902), being item 25 on page 4 of the order of 29 February 2012, will be released to the First Respondent for use on the following conditions:

i)the vehicle continues to be in the custody and control of the Official  Assignee  and  subject  to  the  terms  of  the  interim foreign restraining orders (as amended by these orders);

ii)the First Respondent must first arrange insurance and garaging of  the  vehicle  to  the  satisfaction  of  the  Official  Assignee before the vehicle is released;

iii)the First Respondent must arrange for the maintenance, registration, and any necessary warrants of fitness for the vehicle;

iv)the First Respondent must make the vehicle available for inspection by the Official Assignee at any time;

v)the First Respondent must not take any action that would significantly affect the value of the vehicle, or take steps to dispose of the vehicle; and

(vi)      these   orders   do   not   alter   any   conditions   of   the   First

Respondent's bail.

d)The Official Assignee will release to the Second Respondent monthly payments of $9,166 for living expenses in satisfaction of the Second Respondent's  application  for  living  expenses  pursuant  to  section

28(1)(a) of the Criminal Proceeds (Recovery) Act 2009.  Such sums are to be derived from funds held by the Official Assignee derived

from funds in the Second Respondent's bank account at HSBC, being item 1 on page 3 of the order of 29 February 2012.  These funds are to be released to a bank account in the name of the Second Respondent or to the Second Respondent's solicitors' trust account (whichever is requested by the Second Respondent).   The first payment is to be made on 23 March 2012, and subsequent payments are to be made on the 15th of each month;

e)       The First and Second Respondents and the Interested Party may each open and operate new bank accounts in New Zealand.  These accounts and any sums held in bank accounts that have been paid pursuant to the conditions ordered by the Court on 29 February 2012 or pursuant to the conditions set out here will be excluded from the operation of the interim foreign restraining order and any subsequent registered foreign restraining order;