Dotcom v Attorney-General

[2016] NZHC 2251

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-002168 [2016] NZHC 2251

IN THE MATTER OF

the New Zealand  Bill of Rights Act 1990

and the Government Communications
Security Bureau Act 2003

BETWEEN

KIM DOTCOM First Plaintiff

MONA DOTCOM Second Plaintiff

BRAM VAN DER KOLK Third Plaintiff

JUNELYN VAN DER KOLK Fourth Plaintiff

Cont …/2

Hearing:	On the papers
Appearances:	R M Mansfield and S L Cogan for First Plaintiff G M Illingworth QC, P J K Spring and A K Hyde for Third and Fifth Plaintiffs K P McDonald QC, A N Isac and M H Cooke for Defendants
Judgment:	23 September 2016

JUDGMENT OF GILBERT J

This judgment is delivered by me on 23 September 2016 at 10 am pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

DOTCOM & ORS v ATTORNEY-GENERAL & ANOR  [2016] NZHC 2251 [23 September 2016]

… /2

MATHIAS ORTMANN Fifth Plaintiff

FINN BATATO Sixth Plaintiff

VESTOR LIMITED Seventh Plaintiff

ANDHER MAJESTY’S ATTORNEY- GENERAL, on behalf of the New Zealand Police

First Defendant

HER MAJESTY’S ATTORNEY- GENERAL, on behalf of the Government Communications Security Bureau

Second Defendant

Counsel/Solicitors:
R M Mansfield, Barrister, Auckland

Anderson Creagh Lai Limited, Auckland -  S L Cogan Keegan Alexander, Auckland - P J K Spring, A K Hyde K P McDonald QC, Auckland

A N Isac, Barrister, Auckland

Crown Law, Wellington

Introduction

[1]      In separate proceedings before this Court, the first, third and fifth plaintiffs (the applicants) appeal by way of case stated and seek judicial review of a decision of the District Court delivered on 23 December 2015 finding that they are eligible for surrender to the United States under s 24 of the Extradition Act 1999 (together, the extradition appeal).1  The extradition appeal is in the course of being heard.

[2]      One aspect of the extradition appeal concerns the District Court’s dismissal of applications made by the applicants for a permanent stay of the extradition proceedings on the grounds of alleged abuse of process.  Those applications focus on the means and manner by which the United States, and others allegedly acting on its behalf, pursued the arrest and extradition of the applicants.  The applicants contend, amongst other things, that there was material non-disclosure by the United States when  it  applied  ex  parte  in  the  District Court  for  provisional  arrest  warrants; unreasonable search and seizure by the New Zealand Police; and unlawful interception  of  communications  by  the  Government  Communications  Security Bureau (GCSB).

[3]      In the present proceeding, the applicants seek damages against the Police and the GCSB for allegedly unlawful and unreasonable conduct in connection with the extradition proceedings.  Almost every allegation made in the statement of claim in the present proceeding is replicated in the applications to stay the extradition proceedings.     There  is   therefore  considerable  overlap   between   the  conduct complained of in the two sets of proceedings.

[4]      While discovery has been provided in the present proceeding, no discovery is available in the extradition proceedings.  The applicants seek to overcome this problem, at least in part, by applying for an order permitting them to use as evidence in the extradition appeal five documents that have been discovered by the first

defendant in this proceeding (the discovered documents).2    The applicants contend

1      Dotcom v the United States of America & Anor CIV-2015-404-1770; Ortmann & Ors v the United States of America and Anor CIV-2015-404-1733; Ortmann & Ors v the United States of America CRI-2015-404-429.

2      The initial application was made by the third and fifth plaintiffs.  The first plaintiff later filed a separate application seeking identical orders on identical grounds save that a further affidavit was filed in support of that application.

that the documents are relevant to the stay applications, particularly the following issues:

(a)      the extent of the involvement by the Federal Bureau of Investigation of the United States in the arrest of the applicants;

(b)the extent to which the New Zealand Police were acting on behalf of the United States;

(c)      whether the United States complied with its duty of candour when applying without notice for the provisional arrest warrants; and

(d)whether the United States acted in good faith in relying on certain shortcut provisions in the Extradition Act when seeking the arrest warrants.

[5]      The  applicants  contend  that  the  proposed  use  of  the  documents  in  the extradition proceedings will not cause any injustice to the first defendant and it is in the interests of justice to allow them to use the documents for that purpose.

[6]      The defendants oppose the application. They argue that:

(a)      there are no special circumstances to justify departure from the restrictions on use of discovered documents;

(b)the extradition appeal differs in form and substance from the present proceeding and the defendants are not party to the extradition proceedings;

(c)      the discovered documents principally relate to persons other than the applicants and would ordinarily be kept confidential by the first defendant to the extent permitted by law;

(d)the applicants will not be prevented from mounting their arguments in support of the stay in the extradition appeal if they are not released

from their implied undertaking so non-disclosure of the documents will not materially prejudice them; and

(e)       in  any  event,  issues  of  disclosure  should  be  dealt  with  in  the extradition proceedings following an assessment of relevance.

Legal principles

[7]      Rule 8.30(4) of the High Court Rules provides:

8.30     Use of documents

(4)       A party who obtains a document by way of inspection or who makes a copy of a document under this rule –

(a)       may use that document or copy only for the purposes of the proceeding; and

(b)       except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).

[8]      This rule codifies the common law rule preventing the use of discovered documents for collateral purposes, including in a separate proceeding.   It balances the competing interests of a party’s right to privacy in relation to its own documents with the public interest in ensuring that all relevant information is before the Court when it adjudicates on a claim.  Recognising that discovery involves an invasion of privacy and is provided under compulsion, by order of the Court, for the purpose of enabling a fair trial of the proceeding in which the discovery is given, any recipient of a discovered document may use it only for the purposes of that proceeding.  Any person receiving the document is subject to an implied undertaking to the Court not to use it for any other purpose without leave of the Court.

[9]      This protection against collateral use of discovered documents is critical to maintaining confidence in the integrity of the discovery process and helps ensure that parties comply with their discovery obligations. Therefore, when considering an application for a relaxation of the fundamental rule prohibiting collateral use of discovered documents in a particular case, the Court must be vigilant to ensure that the confidence that litigants are entitled to have in this important safeguard is not eroded. That would be contrary to the public interest.

Applicants’ submissions

[10]     The applicants accept that the extradition court does not have any general power to make pre-trial non-party discovery orders and that the appropriate course for obtaining these documents is by applying to the relevant agencies under the Official Information Act 1982 and the Privacy Act 1993.

[11]     However, Mr Illingworth QC for Messrs Ortmann and van der Kolk submits that this process cannot be completed in sufficient time for the purposes of the extradition appeal.  Accordingly, he submits that the present application is the most efficient  method  of  determining  whether  the  documents  can  be  used  in  the extradition proceeding.

[12]     By contrast, Mr Dotcom’s position is that he has not been able to obtain the documents despite having followed the appropriate statutory processes.  He has an outstanding claim with the Human Rights Review Tribunal arising out of the refusal of his various requests for documents.   Mr Mansfield for Mr Dotcom submits that the present application therefore represents the only avenue currently available for obtaining the discovered documents.

[13]     For these reasons, the applicants submit that there are special circumstances in this case justifying the Court granting permission for them to use the discovered documents for the collateral purpose of the extradition proceedings.

[14]     The applicants note that there is a close factual connection between this proceeding and the extradition appeal and they rely on Telstra New Zealand Ltd v Telecom New Zealand Ltd and Hally Labels Ltd v Powell in support of their submission that this is a relevant factor weighing in favour of the applications.3

[15]     The applicants further submit that there is no real risk of prejudice to the first defendant because the Court will not be asked to make any factual findings against

the defendants without first ordering a full hearing of the stay applications.  This is

3      Telstra New Zealand Ltd v Telecom New Zealand Ltd (2000) 14 PRNZ 541 (HC); Hally Labels

Ltd v Powell [2013] NZHC 900.

because the District Court dismissed the applications summarily, without hearing the evidence the applicants wished to call in support of them.

[16]     The applicants also rely on the observations of Winkelmann J in Dotcom v Attorney-General that the first defendant’s privacy interests in the documents should not weigh heavily because the documents relate to their conduct of public business.4

[17]     Finally, the applicants emphasise that the extradition proceedings have the potential  for  serious  consequences,  namely  the  removal  of  the  applicants  from New Zealand to face trial in a foreign state.   They refer to the Supreme Court’s decision in Dotcom v United States of America which affirmed that high standards of fairness and natural justice are required in cases having profound implications for the lives of those affected, as is the case in the extradition context.5    They submit that this is a further factor weighing in favour of their application.  They are concerned that  the  discovered  documents  may  be  critical  to  the  Court’s  determination  of

whether to direct a full hearing of the stay applications.

Discussion

[18]     The District Court declined to hear the stay applications on their merits and did not permit the applicants to call evidence in support of them. The Court accepted the submissions advanced on behalf of the United States that the factual allegations pleaded in support of the applications could not justify a stay of the proceeding even if proved.   The Court considered that the critical issue was whether the pleaded allegations could affect the fairness of the eligibility hearing and concluded that they could not:

[579]    None of the abuse of process grounds raised in the first respondent’s application leads this Court to decide that this eligibility hearing is not a fair hearing. The applications are therefore declined.

[19]     The  applicants  rely  in  this  Court,  as  they  did  in  the  District  Court,  on

R (Government of the United States of America) v Bow Street Magistrates’ Court in

4      Dotcom v Attorney-General [2014] NZHC 1343 at [54].

5      Dotcom v United States of America [2014] NZSC 24, [2014] 1 NZLR 355 at [118].

submitting that a three-stage screening test should be applied by an extradition court when confronted with an application for stay based on alleged abuse of process:6

Where an allegation of abuse of process is made, the first step must be to insist on the conduct alleged to constitute the abuse being identified with particularity. The judge must then consider whether the conduct, if established, is capable of amounting to an abuse of process. If it is, he must next consider whether there are reasonable grounds for believing that such conduct may have occurred. If there are, then the judge should not accede to the request for extradition unless he has satisfied himself that such abuse has not occurred.

[20]     It is clear from reading the District Court judgment that in upholding the preliminary objection filed by the United States, which was effectively a strike-out application, the applicants failed at the second step.  The Court concluded that none of the pleaded grounds could justify a stay.

[21]     Because the extradition appeal is by way of case stated and judicial review, the focus must be on the Court’s decision and the process by which it was reached. The Court will need to consider whether the District Court misdirected itself on jurisdiction or was wrong in law to conclude that the allegations of unlawful and unreasonable conduct could not justify a stay.  The discovered documents will not assist this analysis.   They are not relevant to any reconsideration of the first two limbs of the Bow Street screening test, assuming that test applies contrary to the submission made on behalf of the United States.

[22]     It will only be if the applicants succeed in establishing that the Bow Street test applies  and  that  they  have  cleared  the  first  two  hurdles  that  the  discovered documents could become relevant.  If that stage is reached, the Court will need to consider how to proceed given that this issue was not considered by the District Court.  The Court will need to ensure that fair trial rights are respected in any further process.    Only  then  would  it  be  necessary  to  consider  whether  it  would  be appropriate to grant the dispensation sought to make collateral use of the discovered documents.  That could depend on the outcome of other, more appropriate, avenues

that have not yet been exhausted for obtaining these documents.

6      R (Government of the United States of America) v Bow Street Magistrates’ Court [2006] EWHC

2256 at [84].

[23]     While  I can  understand  the  applicants’ concerns  that  have  prompted  the present applications, I do not consider that they will be materially prejudiced if the applications are declined at this stage. It follows that the applicants have not demonstrated sufficient justification for relaxing the prohibition on making collateral use of the discovered documents. This is fatal to the applications.

[24]     However,  there  is  an  additional  reason  why  the  applications  should  be declined.  Non-party discovery of the documents could not have been ordered by the District Court for the purposes of the eligibility hearing.  It seems wrong in principle that the applicants should be permitted to overcome that absence of jurisdiction through the present applications.  This is particularly so given that an appeal of this nature is normally limited to a reconsideration of the material that was available to the District Court.

Result

[25]     The applications are dismissed.

[26]     The  defendants  are  entitled  to  costs  on  the  application  calculated  on  a category 2 band B basis.

M A Gilbert J