Dotcom v Attorney-General
[2024] NZCA 270
•26 June 2024 at 11.00 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA426/2022 [2024] NZCA 270 |
| BETWEEN | KIM DOTCOM |
| AND | HIS MAJESTY’S ATTORNEY-GENERAL |
| CA636/2022 | ||
| BETWEEN | KIM DOTCOM | |
| AND | HIS MAJESTY’S ATTORNEY-GENERAL on behalf of the Government Communications Security Bureau | |
| Hearing: | 19 September 2023 |
Court: | Cooper P, Brown and Courtney JJ |
Counsel: | S L Cogan for Appellant |
Judgment: | 26 June 2024 at 11.00 am |
JUDGMENT OF THE COURT
A The appeal in CA426/2022 is dismissed.
BThe appeal in CA636/2022 is dismissed.
CCosts are awarded in accordance with the directions at [97].
____________________________________________________________________
REASONS OF THE COURT
(Given by Brown J)
Table of Contents
Para No
Introduction [1]
Relevant background to CA426/2022 [4]
The release from the undertakings [4]
Review of the MACMA decisions [9]
The judgment of Hinton J [14]
The release from the undertakings [14]
Review of the MACMA decisions [19]
The release from the undertakings [24]
The issue [24]
Counsel’s submissions [25]
Discussion [29]
Judicial review of the MACMA decisions [44]
MACMA [44]
The issues on appeal [47]
Section 49 and mixed-content devices [48]
NZBORA and MACMA [54]
The context of the costs appeal (CA636/2022) [66]
The judgment of Venning J [71]
Grounds of appeal [77]
Discussion [78]
Result [95]
Introduction
In January 2012, the police seized several electronic devices from the Mr Dotcom’s home pursuant to search warrants issued under s 44 of the Mutual Assistance in Criminal Matters Act 1992 (MACMA).[1] The police made forensic clones of the seized devices, some of which were taken to the United States of America by FBI investigators. Much litigation ensued, the details of which, relevant to this judgment, are explained below.
[1]The respondents’ submissions noted that the seized items included computers, hard drives, memory cards, USB sticks and mobile phones.
This judgment addresses appeals against three decisions of the High Court in the course of that litigation. The first and second decisions (the subject of appeal CA426/2022), made in the judgment of Hinton J dated 25 July 2022,[2] are:
(a)the grant of the Attorney‑General’s application to release four former or serving police officers from the undertakings which they were directed to give concerning certain passwords for the seized devices;[3] and
(b)the dismissal of Mr Dotcom’s application for judicial review of two decisions made by the Deputy Solicitor-General under s 49 of MACMA to send the devices to the United States.[4]
[2]Dotcom v Attorney-General [2022] NZHC 1708 [Substantive judgment].
[3]At [26]–[41].
[4]At [42]–[111].
The third decision (the subject of appeal CA636/2022) is an order of Venning J, dated 19 October 2022, that Mr Dotcom is jointly and severally liable with his wife, Mona Dotcom, to pay the costs and disbursements of the Attorney-General in the sum of $55,650.47.[5]
Relevant background to CA426/2022
The release from the undertakings
[5]Dotcom v Attorney-General [2022] NZHC 2706 [Costs judgment] at [34].
The background to this aspect of the appeal is helpfully summarised by the High Court:[6]
[6]Substantive judgment, above n 2 (emphasis in original, footnotes omitted). The Search and Surveillance Act 2012 did not apply to the warrants as it was not yet in force.
[6] On 20 January 2012, New Zealand Police seized electronic devices from Mr Dotcom and his associates under a MACMA warrant. Around 135 devices, which included nearly 300 separate computers, USB sticks, hard drives, memory cards and other electronic items were seized, mostly from Mr Dotcom. Some of the data on these devices is encrypted and requires encryption codes to access.
[7] In March 2012, FBI investigators visited New Zealand and made clones of 19 devices which Mr Dotcom and his associates had nominated as most likely to be rich in relevant evidence. The investigators took one set of clones back to the United States with them, and left a second set in New Zealand.
[8] Mr Dotcom and his associates entered into negotiations with the police where they proposed that they would provide passwords for the encrypted material in exchange for clones of the devices. These negotiations were unsuccessful at that time.
[9] Mr Dotcom challenged the validity of the search warrants under which the devices were seized. On 28 June 2012, Winkelmann J found the search warrants were invalid. Her main concern was that the warrants were overly broad and permitted seizure of irrelevant material.
[10] Winkelmann J then issued a remedies judgment on 31 May 2013 making orders as follows:
1. An order by way of declaration that the MACMA search warrants were unlawful;
2. In respect of items that have not yet been cloned:
2.1 An order that none of the items seized, nor copies or clones thereof, remaining in New Zealand be permitted to leave New Zealand or be accessed in any way other than in accordance with the processes set out in paragraph [2.2] below, subject to any further order of the Court;
2.2 An order providing for the following process to be undertaken at the cost of the Police:
2.2.1 The review of all items seized, including the contents of digital storage devices, for the purpose of identifying irrelevant material;
2.2.2 Items containing only irrelevant material are to be returned to the plaintiffs;
2.2.3 In respect of items identified as mixed content devices, two different clones must be prepared – one complete clone to be provided to the plaintiffs and one “disclosable” clone, with any personal photographs or film deleted, to be provided to United States authorities after the plaintiffs have received their clone;
2.2.4 In respect of items containing only relevant material, clones must be provided to the plaintiffs before a clone is provided to the United States;
3. In respect of items which have already been cloned:
3.1 An order that those clones created by the FBI and currently held by the Police (the existing clones) will be provided to the plaintiffs upon receipt of encryption passwords;
3.2 In respect of clones that have already been sent to the United States and the original devices that were cloned:
3.2.1 An order by way of declaration that the removal of clones from New Zealand was contrary to the Solicitor-General’s direction to the Commissioner of Police dated 16 February 2012, was not authorised in accordance with s 49 of the MACMA, and was accordingly unlawful;
3.2.2 An order requiring the Police to provide confirmation in writing to the plaintiffs identifying those items the clones of which have been removed from New Zealand, and confirming whether or not the existing clones are effectively duplicates of the clones removed from New Zealand;
3.2.3 An order requiring the examination of the original devices that were cloned. If any of these devices are found to contain no relevant material, they are to be returned to the plaintiffs and the Police are to request the United States authorities to destroy clones of that device, and all material derived from that clone. The Police are to provide a copy of this judgment to the FBI so that they are aware of this possibility.
[11] Of these orders, order 2.2.3 (“the photo-stripping order”) assumed significance and is of particular relevance here.
Following a preliminary screening, some 99 devices were returned. Approximately 36 devices containing at least some relevant information were retained by the police, together with clones of all of the devices.
On 19 February 2014, this Court allowed the Attorney-General’s appeal and ruled that the search warrants were valid.[7] With leave to appeal to the Supreme Court having been granted, in order to safeguard the photo-stripping order (which remained in force in the interim) Winkelmann J directed that nominated police officers were to undertake not to disclose the encryption codes to anyone, and in particular to the United States authorities.[8]
[7] Attorney-General v Dotcom [2014] NZCA 19, [2014] 2 NZLR 629.
[8]Dotcom v Attorney-General [2014] NZHC 1505 [2014 High Court judgment] at [29].
On 23 December 2014, the Supreme Court dismissed the appeal and upheld this Court’s decision that the warrants were valid.[9] Consequently, on 16 July 2015, this Court set aside orders 2.1 and 2.2 in their entirety, which meant the photo-stripping order was quashed.[10]
[9]Dotcom v Attorney-General [2014] NZSC 199, [2015] 1 NZLR 745 [2014 Supreme Court judgment].
[10]Dotcom v Attorney-General [2015] NZCA 309 [2015 Court of Appeal judgment] at [16].
Notwithstanding the quashing of the photo-stripping order, the undertakings designed to protect that order remained in place. Hence, the Attorney‑General applied in this Court for a release of the police from the confidentiality undertakings. This Court remitted that application to the High Court where it was determined by Hinton J, who granted the application.
Review of the MACMA decisions
The second aspect of CA426/2023 concerned Mr Dotcom’s unsuccessful application for judicial review of two decisions made by the Deputy Solicitor-General under s 49 of MACMA. That section states:
49 Custody and disposal of things seized
(1) Where any constable seizes any thing pursuant to a warrant issued under section 44, that constable shall deliver the thing into the custody of the Commissioner of Police.
(2) Where a thing is delivered into the custody of the Commissioner of Police under subsection (1), the Commissioner of Police shall arrange for the thing to be kept for a period not exceeding 1 month from the day on which the thing was seized pending a direction in writing from the Attorney-General as to the manner in which the thing is to be dealt with (which may include a direction that the thing be sent to an appropriate authority of a foreign country).
(3) Where, before the expiry of the period referred to in subsection (2), the Attorney-General gives a direction in respect of the thing, the thing shall be dealt with in accordance with the direction.
(4) If no direction is given by the Attorney-General before the expiry of the period referred to in subsection (2), the Commissioner of Police shall arrange for the thing to be returned to the person from whose possession it was seized as soon as practicable after that period has expired.
At the time when the search and seizure occurred in 2012, s 44 read:
44Search warrants
(1) Any District Court Judge who, on an application in writing made an oath, is satisfied that there are reasonable grounds for believing that there is in or on any place or thing—
(a) any thing upon or in respect of which any offence under the law of a foreign country punishable by imprisonment for a term of 2 years or more has been, or is suspected of having been, committed; or
(b) any thing which there are reasonable grounds for believing will be evidence as to the commission of any such offence; or
(c) any thing which there are reasonable grounds for believing is intended to be used for the purpose of committing any such offence—
may issue a search warrant in respect of that thing.
(2) An application for a warrant under subsection (1) may be made only by a constable authorised under section 43(2).
The United States’ formal request for Mr Dotcom’s digital devices was made on 11 January 2012. The subsequent course of relevant events was explained by Hinton J in this way:[11]
[19] On 6 May 2016, the United States Department of Justice reiterated its request for the electronic devices. It advised that it required the original seized items rather than clones to satisfy certain United States evidentiary requirements and because some of the seized items contained encrypted materials or materials that may be hardware dependent.
[20] The Deputy Solicitor-General’s 2017 decision was in response to this request. He consulted with Mr Dotcom and his associates, who strongly opposed the original devices being sent to the United States, but agreed that clones could be sent so long as personal and irrelevant information was first excised.
[21] The Deputy Solicitor-General therefore needed to decide whether (a) he should grant the United States’ request for the original seized devices and (b) if not, whether he should require the excision of personal or irrelevant material from any clones sent to the United States.
[22] The Deputy Solicitor-General determined it would be premature to direct the transfer of the original devices while a proceeding challenging Mr Dotcom’s eligibility for surrender was in progress. He decided to issue a direction under s 49 of MACMA to send (unmodified) clones of the devices to the United States. He noted he may revisit the decision regarding the original devices once the proceeding as to eligibility for surrender had concluded. Later the Deputy Solicitor-General undertook not to issue the direction he had determined upon with respect to the clones, pending the outcome of the plaintiffs’ application for judicial review of his direction (the present judicial review).
[23] On 4 November 2020 the Supreme Court affirmed that the United States’ criminal allegations against the plaintiffs represent offences under New Zealand law.
[24] On 21 December 2021 the Supreme Court confirmed Mr Dotcom was eligible for surrender.
[25] On 4 February 2022 the Deputy Solicitor-General consulted with Mr Dotcom again about the original devices. On 24 March 2022, the Deputy Solicitor-General determined – subject to a series of conditions under s 29 of MACMA – that he would direct the Commissioner of Police to send the original devices to the United States together with the clones.
[11]Substantive judgment, above n 2 (footnotes omitted).
Mr Dotcom sought judicial review of the Deputy Solicitor-General’s decisions. He contended that the Deputy Solicitor-General made errors of law in both the 2017 and 2022 decisions by:[12]
(a)purporting to deal under s 49 of MACMA with material that is not subject to MACMA. (In particular irrelevant material, even if housed in a device alongside relevant material cannot be the subject of a MACMA warrant and therefore cannot be the subject of a s 49 direction);
(b)breaching and/or failing to have regard to his right under s 21 of the New Zealand Bill of Rights Act 1990 (NZBORA) to be secure against unreasonable search or seizure;
(c)wrongly relying on the [Search and Surveillance Act 2012 (SSA)], which does not apply to the warrants in question;
(d)failing to have regard to relevant considerations under s 27 of MACMA and to whether privacy safeguards should be applied;
(e)acting unreasonably by failing to adequately and independently enquire as to the practicability of removing personal/irrelevant material in New Zealand and as to the United States’ evidential requirements; and
(f)acting in a manner inconsistent with the constitutional function of the Attorney-General.
[12]Substantive judgment, above n 2, at [47].
Specifically in relation to the 2022 decision Mr Dotcom further claimed:[13]
(a) The 2022 decision serves no legitimate purpose and is entirely redundant. There is no material difference between the clones and the originals, either in terms of their contents or their evidential value.
(b) The 2022 decision is an illegitimate attempt to “shore up” the 2017 decision and outflank the judicial review after receiving Mr Dotcom’s submissions, by providing additional reasons for what is in essence the same decision. There has been no material change in circumstances that justifies revisiting the decision.
The judgment of Hinton J
The release from the undertakings
[13]At [49].
The Judge first addressed the distinction between an undertaking given in lieu of court orders and an undertaking given as consideration for or as part of a compromise:[14]
[28] Undertakings given to or directed by the Court have the effect of a Court order, and it is open to the affected party to apply to be released from its obligations in the same way parties may, in appropriate cases, apply for orders to be modified or discharged. Where an undertaking is given in lieu of Court orders, the Court regards supervision and review as a necessary incident of the Court’s power to control its own processes. The test is whether circumstances have so changed as to afford good grounds for withdrawal.
[29] However, where an undertaking is given as consideration or as part of a compromise, the change in circumstances must be “significant and render the continuation of the undertaking unjust” considering the perspective of both parties. That is, the standard for upsetting the undertaking is higher.
[14]Footnotes omitted.
The Deputy Solicitor-General contended that the undertakings in question fell into the former category, for which the test is whether circumstances have so changed as to afford good grounds for withdrawal. Mr Dotcom submitted that the case fell into the second category, emphasising that he acted in reliance on the undertakings when providing his passwords to the police. He did not accept that the undertakings were tied to the photo-stripping order. Mr Dotcom also contended that, if the undertakings were never provided, the passwords would not have been given to the police and hence the United States authorities would have had no entitlement to them.
The Judge concluded that the undertakings were more properly treated as Court orders, being “made at the Court’s direction with a view to maintaining the integrity of an existing remedial order”.[15] However, even on the higher threshold advanced by Mr Dotcom, Hinton J considered that the undertakings should be revoked.[16]
[15]At [33].
[16]At [40].
The Judge considered that Mr Dotcom’s argument that he would never have given the passwords without the undertakings was contradicted by the clear record of his previous position, as recorded in the 2013 High Court remedies judgment:[17]
[63] That leaves the issue of the existing clones currently held in New Zealand, and those which have already been shipped to the United States. The Police acknowledge that there are existing clones of some of the seized material, prepared by the FBI and held by the Police. The Police say that although there is no legal obligation on them to do so, they are prepared to give the existing clones to the plaintiffs on receipt of passwords which would enable investigators to access encrypted parts. Mr Davison QC confirmed during the course of the hearing that the plaintiffs would provide those passwords.
[17]Dotcom v Attorney-General [2013] NZHC 1269 [2013 High Court remedies judgment] (emphasis added).
Hinton J observed that “Mr Dotcom was willing to provide the passwords well before the undertakings were conceived”.[18]
[18]Substantive judgment, above n 2, at [35].
Consequently, the Judge accepted the Attorney-General’s contention that the change of circumstances reflected in the quashing of the orders meant there were good grounds to order a release from the undertakings.
Review of the MACMA decisions
Seized devices containing not only relevant material but also irrelevant material, pertaining to Mr Dotcom’ personal affairs, were described in submissions as “mixed content” devices. Mr Dotcom argued that the power conferred by s 49 could only be exercised in respect of “things” lawfully seized pursuant to a warrant issued under s 44. That did not extend to irrelevant material. Hence, there was no jurisdiction to make a s 49 direction in relation to a mixed content device. Mr Dotcom submitted that the Supreme Court had accepted that there was a need to sort and extract irrelevant material before a device was sent overseas.[19]
[19]Relying on 2014 Supreme Court judgment, above n 9, at [190]-[194].
The Judge preferred the Deputy Solicitor-General’s argument that, whether or not it contained some irrelevant material, a seized computer or hard drive represented an indivisible thing that can be dealt with by the police.[20] The Judge stated:[21]
[53] … Under the common law (now governed by the SSA), police are entitled to retain entire computer devices, search them for relevant material, and make forensic clones. I would add that irrelevant material must be dealt with appropriately in the circumstances of each case, such that privacy and s 21 rights are adequately protected. …
[20]Substantive judgment, above n 2, at [51].
[21]Footnote omitted.
Mr Dotcom argued that the decision not to remove irrelevant material from the seized devices breached his rights under s 21, as did the transfer to the United States of personal information irrelevant to the investigation. He contended that an option less intrusive on his rights, which was available and should have been preferred, was sorting the material in New Zealand, and that placing an additional burden of that nature on the New Zealand Police could not legitimately be balanced against his right.
In rejecting that contention, the Judge reasoned:
[67] I consider that it was lawful for the Deputy Solicitor-General to conclude that removing material from the devices or clones would not be feasible in New Zealand and would compromise evidential integrity in the United States trial. Those matters are not merely practical but go to the public interest in efficiently allocating the resources of the policing and wider justice system to facilitate swift justice, and the interest of New Zealand in upholding its international obligations under MACMA. They are interests that are legitimately weighed against Mr Dotcom’s rights.
The Judge considered that Mr Dotcom’s loss of access to New Zealand-based safeguards if the clones were sent to the United States was an inevitable consequence of New Zealand’s participation in an international mutual assistance framework. His privacy was capable of being addressed through the imposition of conditions and the supervision of the United States trial court.[22]
The release from the undertakings
The issue
[22]At [69].
The essence of the appeal concerning the release of current and former police officers from their undertakings was conveniently described in Mr Dotcom’s submissions in this way:[23]
4.1 … the High Court erred by:
(a) Mischaracterising the species of undertaking as a Court order rather than an agreement in reliance on which the Appellant had changed his position.
(b) Further mischaracterising the undertakings as having been intended to “safeguard” the photo stripping order, which was subsequently quashed.
(c) Finding that the Appellant knew or ought to have known that the United States would ultimately have access to the passwords and, hence, that there was no material prejudice to the Appellant if the officers were released from their undertakings.
(d) Finding that the Police are “significantly prejudiced in fulfilling their mutual assistance obligations to assist the FBI with evidence collected in New Zealand”.
Counsel’s submissions
[23]Footnotes omitted.
Mr Cogan accepted as correct the Judge’s summary of the legal principles,[24] in addition drawing attention to the following observation of Asher J in Commerce Commission v Air New Zealand Ltd:[25]
[17] It is relevant if an undertaking is given as part of a compromise that induces a change of position on the part of an opposing party. In such circumstances there can be a greater injustice in releasing the undertaking, than if the undertaking has been given without any quid pro quo. There must be some clear circumstance that has arisen or been revealed that makes it unjust on an overview taking into account the interests of all parties to continue to enforce the undertaking. It is relevant to take into account the circumstances of the giving of the undertaking and subsequent developments, and the effect on the parties of release. It is not any change of circumstances that would warrant a release. The change must be significant and render the continuation of the undertaking unjust on an overview, considering the perspectives of both parties.
[24]Substantive judgment, above n 1, at [28]–[29].
[25]Commerce Commission v Air New Zealand Ltd HC Auckland CIV-2008-404-008352, 3 November 2011 at [17].
While acknowledging that the quashing of the photo-stripping order was a change of circumstances, Mr Cogan submitted it was not a sufficiently significant change to justify release from the undertakings. The Judge erred in characterising the undertakings as having been ordered rather than agreed and therefore applied the incorrect test. In concluding that the undertakings were redundant following the quashing of the order, the Judge overlooked the fact that as a result of the undertakings Mr Dotcom had changed his position and the police officers had obtained something (Mr Dotcom’s passwords) to which they would not otherwise have been entitled. Hence, the status quo prior to the undertakings could not be restored.
With reference to the finding (based on the statement by Mr Dotcom’s then counsel) that, regardless of the undertakings, Mr Dotcom had already agreed to provide his passwords, Mr Cogan argued that the Judge failed to have regard to the subsequent dispute which was the subject of further orders as to the scope of the required undertakings — namely whether the police could disclose the passwords to the United States.[26]
[26]2014 High Court judgment, above n 8.
Observing that the appeal turned on whether the Judge made a material error in analysing the reason why the undertakings were directed, Mr Boldt examined the factual and procedural background in some detail. In his submission, that review demonstrated that the Judge was correct both as to the characterisation of the undertakings and in her conclusion as to Mr Dotcom’s earlier willingness to provide his passwords. He submitted that when the matter returned to the High Court in 2014 the only issue was how the FBI should obtain access to relevant but encrypted material. He observed that it was only in opposition to the release application that Mr Dotcom suggested that the United States authorities should be denied access to the encrypted information altogether.
Discussion
As Mr Boldt submitted, MACMA provides a formal framework for New Zealand to act on requests from foreign states for assistance in criminal matters. The international obligations underpinning MACMA were summarised by this Court in Solicitor-General v Bujak:[27]
[23] The international background to the MACMA is twofold. One is the Harare Scheme … The other is the United Nations Model Treaty on Mutual Assistance in Criminal Matters (adopted by General Assembly Resolution 45/117 of 14 December 1990) to which the MACMA is New Zealand’s response. … [T]he UN Model Treaty and the MACMA respond to the outmoded rule of international law that one state will not assist another to enforce … penal measures.
[27]Solicitor-General v Bujak [2008] NZCA 334, [2009] 1 NZLR 185.
A consistent principle of the several mutual assistance conventions to which New Zealand is a party is that states should provide the widest possible assistance available in domestic law. The standard for the issue of a mutual assistance search warrant is the same as for a domestic warrant.[28]
[28]Mutual Assistance in Criminal Matters Act, s 44(1). The Court must be satisfied there are “reasonable grounds for believing” that evidence of the commission of an offence will be found in the place to be searched.
We agree with Mr Boldt that s 49 directions normally follow as a matter of course after a mutual assistance warrant is executed. Providing seized items to the requesting state is a normal consequence of a MACMA warrant and no separate request for the transfer of seized items is required.
Because the Search and Surveillance Act was not in force when the warrants were issued, the obligation under s 130 of that Act to provide access information (including passwords) did not apply. As Mr Cogan emphasised, Mr Dotcom was under no legal obligation to provide his passwords. However, because Mr Dotcom wished to have access to his computer and hard drives in order to prepare his case in opposition to extradition proceedings, in February 2012 he sought such access. For their part the police wanted Mr Dotcom to release his passwords in order that the encrypted material could be assessed.
The subsequent negotiations, which are detailed in the judgment of Winkelmann J dated 28 June 2012, were unsuccessful.[29] It appears that the parties then decided that the question should be left for determination as part of the judicial review proceedings challenging the validity of the mutual assistance warrants. Mr Cogan argued that the question was resolved by a passwords for clones arrangement “recorded” in the remedial orders of 31 May 2013, which we understood to be order 3.1.[30] However, because difficulties arose with the practical implementation of the order, to borrow Mr Cogan’s expression a stalemate ensued.
[29]Dotcom v Attorney-General [2012] NZHC 1494, [2012] 3 NZLR 115 at [101]–[121].
[30]2013 High Court remedies judgment, above n 17, at [65].
A particular difficulty was the photo-stripping order. Mr Dotcom was concerned that if FBI investigators were given access to the passwords, they could use the clones already in their possession to bypass that order. The Attorney-General accepted that as long as the photo-stripping order remained in force, the passwords would not be transmitted to the United States. The parties sought unsuccessfully to devise a solution which would address Mr Dotcom’s concern pending the hearing of the Attorney-General’s appeal against the photo-stripping order.
Further directions were sought. They were considered in the 2014 High Court judgment of Winkelmann J which summarised the state of play as follows:[31]
[3] In May 2013 I issued a further judgment (the remedies judgment), granting relief to the plaintiffs in light of my findings set out above and reserving leave to the parties to apply for further directions if required to give effect to the orders.
[4] The plaintiffs now seek directions in connection with an aspect of the relief I granted in connection with the findings set out at (c) above, the unlawful shipping of the clones. I directed:
That those clones created by the FBI and currently held by the Police (the existing clones) will be provided to the plaintiffs upon receipt of encryption passwords.
[5] This relief was shaped in part by an exchange with counsel during the hearing. Counsel for the Police said that although there was no legal obligation on them to do so, the Police were prepared to give their existing clones of these nine hard drives to the plaintiffs on receipt of passwords which would enable investigators to look at the encrypted parts of hard drives seized by the Police. The plaintiffs in turn said they were prepared to provide the encryption passwords.
[6] Perhaps unsurprisingly, given the history of these and related proceedings, the parties have been unable to resolve the basis upon which that direction can be implemented and the plaintiffs have made this application. Although there is some difference between the positions of the first, third and fourth plaintiffs, in broad brush, it can be stated that the plaintiffs and the defendants are now agreed upon a protocol for access, essentially in the terms set out in schedule A to this judgment. There is one principal sticking point the parties have asked me to resolve by direction. It is the undertaking included in the proposed protocol by which the Police recipients of the password undertake not to disclose the encryption code to any representative of the government of the United States. The Police say that they should be able to give the passwords to the FBI. They say that was the intention of the orders made by me, and the FBI require the password for legitimate investigative purposes. The Police also say they need FBI technical assistance to ensure that the material has been fully decrypted before it is released to the plaintiffs.
[7] The plaintiffs respond that if the FBI had those passwords, that would enable them to access the encrypted parts of the clones, even though they only have those clones by reason of the illegal action of the Police in shipping them offshore to the FBI. Moreover, the scheme of the direction I gave was that there would be an initial sorting prior to the FBI gaining access to the content of the hard drives now in Police control, and the provision of passwords is inconsistent with this scheme.
[8] This application is urgent so far as the plaintiffs are concerned, as they say they require access to the content of the hard drives to assist them in their preparation for the hearing of the United States’ application to extradite them to the United States to stand trial for criminal copyright infringement and related charges. Up to this point delay in implementation has been caused principally by the difficulty Mr Dotcom has had in recalling his encryption passwords. I am told by the plaintiffs that this is not unusual as encryption software often requires lengthy, alpha-numeric passwords. In Mr Dotcom’s case, he does not have a password written down but rather depends upon access to a hint file on his computer hard drive to give him a series of prompts which will enable him to reconstruct the password on each occasion he needs to have resort to it. The parties initially struggled over the basis upon which Mr Dotcom could gain sufficient access to the hint files on his hard drives. The Police were concerned that allowing access might imperil the security of the information on the hard drives and jeopardise the investigation. That difficulty has now been resolved, at least for now, as the parties have agreed access for Mr Dotcom to the hint file.
[31]2014 High Court judgment, above n 8 (footnotes omitted).
The solution devised by Winkelmann J was that the relevant encrypted material should be extracted in New Zealand and provided to the FBI in decrypted form:
[19] In the terms of the orders made, it is clear that what was contemplated was the provision of the passwords to the Police. The plain reading of the order is consistent with that. It was the clones held by the Police which were to be provided to the plaintiff once the codes were received. I also consider this approach consistent with the tenor of the remedies judgment. As I said in paragraph [58] of that judgment, the sorting exercise which the Police were obliged to do was to be undertaken onshore and the FBI not provided with the categories of personal material I identified. Some of the encrypted material on the clones in the FBI’s custody may fall within the categories of personal material identified by me. It would be meaningless to direct this sorting on shore, if the FBI were also to be provided with the encryption codes. Those codes would enable them to access all of the material, effectively delivering it to them.
As Mr Boldt correctly observed, the direction provided a mechanism, albeit a complex one, whereby encrypted content would be provided to United States investigators whilst still maintaining the photo-stripping order.
However, when in 2014 the Supreme Court affirmed that it was lawful for the Police to seize and retain all the data on Mr Dotcom’s devices (provided at least some of the information on each was relevant to the United States investigation), there was no longer any need for the authorities in either jurisdiction to excise personal photographs and videos.[32] Hence, the photo-stripping order was quashed by this Court in 2015.[33]
[32]2014 Supreme Court judgment, above n 9.
[33]2015 Court of Appeal judgment, above n 10.
Hinton J analysed that sequence of events in this way:[34]
[38] It was only after order 3.1 was made that complications arose in relation to safeguarding the photo-stripping order. The latter order was designed to remove personal information from the devices. If the passwords were provided to the police, and consequently to the United States, the personal information on the clones held by the United States could be accessed by them via the passwords, defeating the purpose of the photo-stripping order. Clearly the undertakings were given as recorded above, to safeguard order 2.2.3. The Court of Appeal has now quashed order 2.2.3, and the Supreme Court has confirmed the warrant was not invalid for overreach into irrelevant material.
[34]Substantive judgment, above n 2.
The Judge’s perception that the undertakings were made at the Court’s direction with a view to maintaining the integrity of an existing remedial order formed the basis for her conclusion that they were “more properly treated as Court orders”.[35]
[35]At [33].
In challenging the Judge’s conclusion in this Court, Mr Cogan adopted a more nuanced approach. He first submitted that the parties had reached agreement between themselves that undertakings were to be provided and that “only the scope” of those undertakings was determined by the Court. Secondly, he argued that the undertakings were provided pursuant to the passwords for clones arrangement, not just the photo-stripping order. While acknowledging that “the provision of the passwords may also have provided efficacy” to the photo-stripping order, he contended that was objectively ancillary to Mr Dotcom’s goal of obtaining access to clones of his devices prior to the eligibility hearing.
We are unpersuaded by this refined line of argument. The passwords for clones exchange as originally devised was a direction of the Court. Although Winkelmann J acknowledged that it was “shaped in part” by an exchange with counsel during the hearing,[36] it is nonetheless properly viewed as a Court direction. The subsequent stalemate gave rise to a further court direction in July 2014. While both the orders were made in a context where the parties recognised the utility of such an exchange, the fact is that the parties were unable to reach agreement. As Winkelmann J observed in the 2014 judgment, there was “one principal sticking point” which the parties had requested be resolved by a court direction.[37]
[36]2014 High Court judgment, above n 8, at [5].
[37]At [6].
Hence, we do not accept Mr Cogan’s construction of events to the effect that the undertakings were both ordered and agreed with the consequence that the Judge erred in concluding that the undertakings were redundant following the quashing of the photo-stripping order. In our view the Judge did not mischaracterise the status of the undertakings. The contention that the Judge applied an incorrect test in assessing the significance of the change in circumstances occasioned by the quashing of the photo-stripping order is rejected.
In any event, we agree with the Judge’s analysis that even on the higher threshold advanced for Mr Dotcom the undertakings were properly revoked.[38] We also endorse the Judge’s conclusion that order 3.1 was designed to facilitate the FBI’s investigation rather than obstruct it, and the finding that Mr Dotcom’s contention that the interests of the FBI were irrelevant was patently incorrect.[39] As Mr Boldt correctly observed, the Police have no particular interest in the seized devices or the encrypted content other than as a temporary custodian on behalf of the United States which is lawfully seeking assistance under MACMA.
Judicial review of the MACMA decisions
The issues on appeal
[38]Substantive judgment, above n 2, at [40].
[39]At [40].
Although the notice of appeal identified six errors said to have been made in the dismissal of the judicial review application, the focus of Mr Dotcom’s contention was that the s 49 directions were:
(a)erroneous in law because s 49 does not permit the Deputy Solicitor-General to deal with irrelevant material; and
(b)in breach of s 21 of NZBORA because they amounted to an unreasonable seizure of Mr Dotcom’s personal information.
Section 49 and mixed-content devices
On this issue Mr Cogan reprised his High Court argument.[40] He submitted that, as the power conferred by s 49 is parasitic on the scope of the warrant issued under s 44, the Deputy Solicitor-General could not make orders under s 49 in relation to things not lawfully seized under s 44. As he put it, s 49 could not make relevant that which was irrelevant under s 44. He contended that the “things” seized in this case comprised not only the devices themselves but also the information stored on them. In the case of a mixed content device, the jurisdiction to make a direction under s 49 did not extend to irrelevant information stored on the device. The Judge’s conclusion to the contrary was in error.
[40]See [15] above.
Mr Boldt described Mr Dotcom’s contention as “not easy to follow”. Mr Boldt also supported the Judge’s conclusion and reasoning. In particular, he submitted that the Judge was correct to hold, especially in light of New Zealand’s obligation to provide assistance to the fullest extent permissible under domestic law, that there is no basis to treat devices seized under a MACMA warrant differently from devices seized under a domestic warrant.[41]
[41]Substantive judgment, above n 2, at [53].
Section 161 of the Search and Surveillance Act (which reflects the common law) provides that in a domestic investigation the police are not required to separate relevant from irrelevant material when mixed content devices are seized and that clones of such devices may be retained in their entirety. Mr Boldt submitted that successive decisions of this Court confirmed that a computer or hard drive containing at least some relevant material is appropriately regarded as a “thing” (similar to a diary, a logbook or a very long document) rather than a container (such as a filing cabinet, from which irrelevant material can readily be removed).[42] He observed that Mr Dotcom had never disputed that that analysis of domestic law prevailed prior to the Search and Surveillance Act.
[42]Gill v Attorney-General [2010] NZCA 468, [2011] 1 NZLR 433 at [115] citing A Firm of Solicitors vDistrict Court at Auckland [2006] 1 NZLR 586 (CA) at [106] and [114]–[115]; and Chief Executive, Ministry of Fisheries v UnitedFisheries Ltd [2010] NZCA 356, [2011] NZAR 54 at [46]–[64].
We agree with Mr Boldt’s submission. In addition, we note that, with reference to the Supreme Court’s 2014 decision in Dotcom v Attorney-General, the Judge stated:[43]
[56] Further, I agree with Mr Boldt that there is nothing in the Supreme Court judgment that suggests it intended to overrule or distinguish Gill v Attorney-General and Chief Executive, Ministry of Fisheries v United Fisheries Ltd. The Supreme Court held that the s 44 MACMA warrant covered not only the initial search but also the continued search of the devices for relevant content. In doing so it applied the main tenets of Gill and United Fisheries. It did not silently overrule those cases nor did it purport to disapply them in the MACMA context.
[43]Substantive judgment, above n 2 (footnote omitted).
Although that conclusion was not directly challenged before us, Mr Dotcom’s submissions referred to a passage in the Supreme Court’s decision which included the statement “there was no legal basis for the [police] officers to retain material that did not fall within the categories in s 44(1) of [MACMA]”.[44] In response, Mr Boldt suggested Mr Dotcom had overlooked the fact that that statement was summarising part of the High Court decision which this Court had overturned. It is appropriate in this context to also note the following observation of Hinton J:[45]
[57] In making its remarks about the sorting of relevant from irrelevant material, the Supreme Court was commenting generally on the requirements for a valid warrant. It was not concluding that irrelevant material must be excised from mixed content devices before they can be subject to a s 49 direction. Section 49 was not at issue before the Supreme Court. The Court stated that it did not take any view with regard to the interaction of a s 49 direction with the sorting exercise:
The warrants authorised searches of the computers’ contents for material relevant to the alleged offending, and the seizure of any relevant material. … In the particular circumstances of this case, sending clones of the seized computers overseas may have been the only practical way of effecting the search, but that is not something on which we should express any view as it is the subject of separate proceedings.
[44]2014 Supreme Court judgment, above n 9, at [153].
[45]Substantive judgment, above n 2 (emphasis in original, footnote omitted).
For these reasons we accept that Hinton J was correct to conclude that the Deputy Solicitor-General had lawful authority to deal with the seized devices under s 49.
NZBORA and MACMA
It was common ground that the power to make a direction under s 49 must be exercised in a manner consistent with NZBORA, in particular the rights and freedoms protected by s 21. Mr Dotcom’s contention was that the power of direction in s 49 must accommodate a reasonable expectation of privacy of individuals in their property. The transfer to the United States of his personal information that was irrelevant to the investigation amounted to an unreasonable or unlawful seizure of his personal information for the purposes of s 21.
As the Judge noted, the context in which the Deputy Solicitor-General made his decisions was the Supreme Court’s 2014 decision that the warrants “were lawful, despite the large amount of irrelevant material that would inevitably be seized”.[46] The Judge observed that the remaining devices in the custody of the Commissioner of Police (following the return in 2013 of some 99 devices which were considered to contain no relevant material) shared the characteristic that it was believed there was some relevant material on them. The Judge considered there was no need for the Deputy Solicitor-General to be “more granular” and to review the content of each device himself.[47]
[46]At [62]. The Supreme Court had also found that the warrants did not require conditions relating to post-seizure management in order to be lawful.
[47]Substantive judgment, above n 2, at [72].
The Judge stated:
[63] As with all search and seizure, there is a balancing act between the right to privacy and the legitimate interests in acquiring the objects of the search, including law enforcement interests. That balancing act is, to some degree, within the discretion of the decision-maker. It is not for this Court on a judicial review to scrutinise whether that balance is correctly struck, rather, the more important focus is whether the decision-maker properly took Mr Dotcom’s right into account. Nonetheless I consider whether the decision was in breach.
The Judge concluded that both decisions took Mr Dotcom’s s 21 rights into account.[48]
[48]At [64]–[65].
Broadly speaking, the Judge was said to have erred in three respects:[49]
(a)finding that, because the warrants were lawful and the seized items contained some relevant material, it followed that no further sorting and excising of irrelevant material was required;
(b)finding that it was lawful for the Deputy Solicitor-General to conclude that removing material from the devices and/or clones would not be feasible in New Zealand; and
(c)finding that it was lawful for the Deputy Solicitor-General to conclude that removing material from the devices and/or clones would compromise evidential integrity in the United States trial.
[49]Mr Dotcom’s written submissions included a fourth criticism, namely that the Deputy Solicitor-General placed reliance on the United States “speedy trial” requirements. However, that line of argument was not considered in the judgment, nor was it raised in the notice of appeal.
The first finding was said to be contrary to previous rulings, including by the Supreme Court. However, we agree with Mr Boldt’s rejoinder that that contention turns on the same misapprehension explained at [51] above. As he submitted, this Court has previously determined that it does not breach s 21 for investigators to seize and retain irrelevant material on electronic devices, provided that those devices contain at least some evidential material.[50] The fact that the irrelevant material may be sensitive and personal, like the patient files in Gill v Attorney-General, does not alter that analysis.[51] Mr Boldt also drew attention to the MACMA safeguards which reflect the values of s 21 as discussed by the Judge.[52]
[50]See above n 42.
[51]Gill v Attorney-General, above n 42.
[52]Substantive judgment, above n 2, at [71].
Mr Dotcom contended in the High Court that the sorting of material onshore was an available option which was less intrusive to his rights and should have been preferred.[53] A particular proposal,[54] which was considered and rejected by the Deputy Solicitor-General, comprised a three-step process whereby in the first instance Mr Dotcom would nominate irrelevant material, his nominations would then be scrutinised by the Police and any disputes would be resolved by an appointed person. Once a final selection was made, a “logical evidence file” would be created containing only relevant material. Mr Dotcom argued that neither the additional burden placed on the Police nor other practical concerns could legitimately be balanced against his s 21 rights.[55]
[53]At [66].
[54]Outlined in the evidence of an expert witness, Mr McKenzie.
[55]Substantive judgment, above n 2, at [66].
With reference to the feasibility finding, Mr Boldt observed that in this Court Mr Dotcom did not argue that the Deputy Solicitor-General failed to give adequate consideration to the New Zealand-based alternative which Mr Dotcom proposed. Rather it was Mr Dotcom’s contention that no reasonable decision-maker could have rejected his proposal.
Notably, the submission for Mr Dotcom stated that the Judge’s findings of lawfulness, both in respect of the feasibility and evidential integrity propositions, were not “available on the evidence”. It was suggested that it could be safely assumed that the Police are more than capable of making the necessary determinations of relevance unaided and that it was “difficult to accept” that the Police lack the resources and capability to carry out the required review. It was further submitted that it would not in any event be necessary for the Police to manually sift through every single file because files can be identified and sorted automatically by software. The reality was said to be that the Police simply do not want to undertake the task.
This challenge is premised on one particular interpretation of the evidence which was before the Deputy Solicitor-General. In our view it was clearly not the only interpretation available. The view which the Deputy Solicitor-General formed was also available. We discern no error in the Judge’s conclusion that the Deputy Solicitor‑General’s analysis of a New Zealand-based sorting procedure was not unreasonable. The Judge observed that the volume of material was considerable and that this was not a case where personal material was obviously discrete from relevant material.[56]
[56]At [68].
Furthermore, the Judge’s analysis correctly acknowledged that the factors which the Deputy Solicitor-General was required to weigh were not confined to the practical considerations of what might be achievable by the commitment of intensive police resources. The public interest in efficiently allocating police resources and the resources of the wider justice system, as well as New Zealand’s interest in discharging its international obligations were legitimately weighed against Mr Dotcom’s rights.[57] As Mr Boldt correctly observed, MACMA is designed to facilitate the transfer of lawfully seized evidence to the requesting country. It does not contemplate ongoing immersion of the Police in the minutiae of a complex foreign investigation.
[57]At [67].
Finally, with reference to the third of the findings challenged, Mr Boldt drew attention to the fact that the Deputy Solicitor-General did not, as Mr Dotcom asserted, reject the “logical evidence file” option on the ground that the files would lose their evidential integrity. What the second decision said was:[58]
33.… those involved in the process would have to document their interactions with the files exhaustively and would, it appears, have to give evidence in the United States to explain the evidential integrity of any files that were produced in evidence. Mr McKenzie suggests verification could be assured by retaining the original files in their entirety in New Zealand. It is contrary to the policy underpinning MACMA for foreign prosecutors to remain dependent on New Zealand-based evidence and witnesses to that extent.
[58]Footnote omitted.
We accept that the outcome of the decisions, that lawfully seized devices should be sent to the requesting country, although subject to certain conditions, accorded with the purpose of MACMA. In our view, the Judge’s conclusion that the decisions did not involve an error of law and were not unreasonable was correct. The appeal against that conclusion must fail.
The context to the costs appeal (CA636/2022)
In 2013, Mr Dotcom and his wife (the Dotcoms) brought proceedings seeking declarations and damages for breach of s 21 of the NZBORA and the tort of invasion of privacy in respect of the unlawful interception by the Government Communications Security Bureau (GCSB) of their private communications. The Crown admitted liability and consented to the declarations sought. The only area of contest was the appropriate award of damages.
Part of the GCSB’s discovery was subject to a national security classification. The mechanisms put in place to address national security issues included the engagement of a special advocate (Mr S B W Grieve KC) with appropriate security clearance and an independent expert adviser, both of whom had unrestricted access to the classified material.
To protect the classified information the GCSB sought orders under s 70 of the Evidence Act 2006 which relevantly states:
70 Discretion as to matters of State
(1) A Judge may direct that a communication or information that relates to matters of State must not be disclosed in a proceeding if the Judge considers that the public interest in the communication or information being disclosed in the proceeding is outweighed by the public interest in withholding the communication or information.
…
The Dotcoms opposed the application.
Following a three-day hearing, Gilbert J granted the application and made the following orders:[59]
[65] I make an order pursuant to s 70 of the Evidence Act 2006 that those parts of the defendants’ discovery which have been redacted on the grounds of national security, and the raw communications of the plaintiffs intercepted by the second defendant, are not to be disclosed in this proceeding to any person other than the special advocate, his expert adviser and the Court.
[66] The raw communications referred to are not discoverable in this proceeding.
[59]Dotcom v Attorney-General [2017] NZHC 1621 [2017 High Court judgment].
An appeal to this Court was dismissed.[60] In early 2020, the Supreme Court declined leave to bring a further appeal.[61]
[60]Dotcom v Attorney-General [2019] NZCA 412, [2019] 3 NZLR 397 [2019 Court of Appeal judgment].
[61]Dotcom v Attorney-General [2020] NZSC 1 [2020 Supreme Court judgment].
The GCSB sought costs awards from Mr and Mrs Dotcom jointly and severally as follows:
(a)increased costs on the s 70 application in the sum of $69,743.25;
(b)scale costs (on a 2B basis) of $4,778.65 for the defence of the application to cross-examine the GCSB’s witnesses; and
(c)usual disbursements.
The judgment of Venning J
The GCSB submitted that the s 70 application should never have been necessary as Mr Grieve had advised that there was no basis to oppose it. Furthermore, this Court had previously ruled that the raw communications were not discoverable.[62] The GCSB argued that the refusal to acknowledge those matters resulted in three unnecessary hearing days, considerable cost to the GCSB in connection with the hearing, and the need for a physical modification to premises to accommodate a secure hearing in Auckland.
[62]Attorney-General v Dotcom [2013] NZCA 43, [2013] 2 NZLR 213 [2013 Court of Appeal judgment].
In reliance on r 14.6(3)(a) of the High Court Rules 2016, the GCSB sought an uplift to six days on the basis that the time required substantially exceeded the time band C allowance. It submitted that the Dotcoms’ unreasonable opposition warranted a further increase under r 14.6(3)(b). It invoked the “some other reason” category in r 14.6.(3)(d) in support of the cost of the modifications to the hearing premises. The Dotcoms contended that the s 70 application gave rise to issues of significant public interest, relying on r 14.7 and New Health New Zealand Inc v South Taranaki District Council.[63] They submitted that costs should lie where they fell.
[63]New Health New Zealand Inc v South Taranaki District Council [2014] NZHC 993.
Venning J observed that generally cases where costs are waived or reduced because the case concerns a matter of public interest involve a litigant bringing a proceeding in the public interest, a public entity acting in the public interest, or some wider public interest aspect. He noted that in New Health, where the issue was the legality of fluoridating water supplies, Heath J said that for the r 14.7(e) exception to apply the unsuccessful litigant must have acted reasonably and that a private interest cannot be dressed up as a public one.[64]
[64]Costs judgment, above n 5, at [25] citing New Health, above n 63, at [10].
Ruling against the Dotcom’s opposition on public interest grounds, the Judge explained that, while the proceedings required the Court to consider balancing the public interest consideration against the Dotcoms’ interest in the documents, their proceedings essentially involved a private claim against the GCSB for damages.[65]
[65]Costs judgment, above n 5, at [26].
The Judge accepted s 14.6(3)(a) applied and that an adjusted increased sum on a 2C basis of $46,495.50 was justified.[66] However, the Judge did not consider that any further uplift was warranted. The additional cost in the provision of court facilities was not something that the Dotcoms should be required to meet, and they had not acted so unreasonably as to support another uplift.[67]
[66]At [29].
[67]At [31]–[32].
The costs in respect of the cross-examination and the disbursements sought were approved, resulting in a total award of $55,650.47.
Grounds of appeal
Mr Dotcom appealed contending that the Court erred:
(a)in finding that neither of the applications,[68] nor the proceeding in which they arose, concerned a matter of public interest despite issues of public interest being critical to the definition of a “communication or information that relates to matters of State” for the purposes of s 70(2);
(b)in finding that the fact the proceeding involved a claim for damages meant it did not involve a matter of public interest despite the fact that it concerned breaches of the Government Communications Security Bureau Act 2003 and NZBORA;
(c)in finding that increased costs were justified under r 14.6(3)(a) notwithstanding that the factors which the Court found had put the GCSB to additional cost were occasioned by its own unlawful conduct and the closed material procedure required as a result of the s 70 application; and
(d)by failing to have adequate or any regard to the principle in Attorney-General v Udompun, that in cases engaging NZBORA, it may not always be appropriate to allow costs to follow the event as to do so may discourage litigants from bringing such claims.[69]
Discussion
[68]In addition to the s 70 application, there was an application by Mr Dotcom for cross-examination of the GCSB witnesses.
[69]Attorney-General v Udompun [2005] 3 NZLR 204 (CA) at [186].
We agree with Mr Cogan that the crux of the appeal and indeed the sole issue is whether the relevant contest involved a matter of public interest. In essence, the Judge was said to have erred by taking into account the damages proceeding as a whole instead of focussing on the interlocutory application under s 70. To appreciate the significance of the distinction it is useful to briefly traverse the course of the proceeding.
A convenient point of departure is this Court’s judgment in Attorney‑General v Dotcom in the context of Mr Dotcom’s 2012 judicial review proceeding. This Court held that, because the only live issue concerned the level of Baigent compensation, the nature of that limited inquiry meant that discovery of the raw communications obtained by the acknowledged unlawful interception by the GCSB was not necessary.[70]
[70]2013 Court of Appeal judgment, above n 62, at [56] and [60].
The issue of discovery of the raw communications surfaced again in the context of the 2013 proceeding. The GCSB argued that the effect of this Court’s 2013 decision was that Mr Dotcom was estopped from pursuing that issue. In his 2017 judgment, Gilbert J accepted that he was estopped from finding that the raw communications were discoverable. In any event, as noted above, he ruled that the raw communications were not relevant and he granted the s 70 application.[71]
[71]2017 High Court judgment, above n 59, at [66].
Mr Dotcom’s appeal against that judgment was heard in two parts. With reference to the estoppel issue, in 2018 this Court held that the enquiry into common law damages for the torts of breach of privacy and negligence in the 2013 proceeding was a different and broader inquiry than that in the 2012 proceeding for Baigent damages.[72] Consequently, no issue estoppel arose.[73] The appeal against the balance of the 2017 judgment was dismissed by this Court in 2019.[74]
[72]Dotcom v Attorney-General [2018] NZCA 220, [2018] NZAR 1298 at [18] and [35].
[73]At [38].
[74]2019 Court of Appeal judgment, above n 60.
Venning J reasoned that the Dotcoms’ proceeding essentially involved a private claim against the GCSB for damages and that the fact Gilbert J was required to consider matters of public interest did not make the proceeding for a personal claim one of public interest.[75]
[75]Costs judgment, above n 5, at [27].
Mr Cogan took issue with that process of reasoning. He submitted that the issues engaged related to unlawful state surveillance of citizens. The appropriate quantum of compensation for a plaintiff in relation to such conduct should be viewed as a matter of public interest in the sense that the public can thereby gain a sense of the level of opprobrium or condemnation of the breach. So, while accepting that an award of damages would be to the plaintiff’s benefit and not to the general public, he maintained that the general public does have an interest in the outcome because the rights engaged are very much rights of interest to all.
On the question of the nature of the proceeding, Mr Boldt submitted the answer lay in this Court’s conclusion in 2019:[76]
[71] Mr Mansfield argued that there is a wider public interest in holding GCSB to account and this warrants disclosure of the raw communications, notwithstanding the fact they might indirectly reveal GCSB’s methodology and tradecraft. That, he argued, is already in the public domain. We do not accept that submission. Disclosure under s 70 is made, as with all discovery, for the purposes of the litigation. There is a public interest in holding GCSB accountable for unlawful conduct, but Mr Dotcom has won judgment on liability and the (now former) Prime Minister has apologised for GCSB’s conduct. What remains is a private claim for damages.
[76]2019 Court of Appeal judgment, above n 60.
He also drew attention to the Supreme Court’s reasons for declining leave to appeal:[77]
[10] We are not satisfied that it is necessary in the interests of justice to hear the proposed appeal. While there may be questions arising about the scope and application of s 70 of the Evidence Act, the present case is not the appropriate case to consider those issues. No question of principle arises. Rather, the matters the applicant wishes to raise relate to whether natural justice was met in this particular case and as to the weight given to the competing public interests on these facts.
[77]2020 Supreme Court judgment, above n 61 (footnote omitted).
Mr Boldt noted that costs were awarded against Mr Dotcom in both Courts. He also placed reliance on the litigation history, emphasising the fact that it was only the addition of the private law causes of action in the 2013 proceeding that led this Court in 2018 to allow the question of access to the raw communications to be revisited.
On the issue of whether this case is fairly characterised as a public interest matter, we find Mr Boldt’s analysis persuasive. Venning J correctly identified the relevant test. His assessment of the public interest issue reflected the earlier conclusions of the appellate courts.[78]
[78]As reproduced above at [86] and [87].
Mr Cogan mounted an alternative argument that, even if the proceeding was perceived to be fundamentally a private claim for damages, it is well-established that claims engaging NZBORA are amenable to a refusal or reduction of costs, citing Udompun for the proposition that remedies in Baigent damages cases are not particularly remunerative and hence the application of normal costs rules would discourage litigants from bringing NZBORA claims.[79]
[79]Attorney-General v Udompun, above n 69, at [186].
In addition, Mr Cogan advanced a subsidiary argument that, if the proceeding was not properly characterised as a matter of public interest, the appropriate lens was the interlocutory application rather than the proceeding itself. As he put it, the public interest is “hard wired” into s 70 because it is only engaged in circumstances where matters of state are at issue. The court is required to weigh the public interest in disclosure against the public interest in withholding the material and hence the public interest is “baked into” s 70.
While acknowledging that in Udompun this Court observed that it may not always be appropriate for costs to follow the event in NZBORA cases, Mr Boldt submitted that there is no general rule to that effect. It remains open to the Court in the exercise of its discretion to award costs to a successful party in the usual way. He submitted that in the present case the fact, duration, and general nature of the unlawful interception are well understood. Only the things said in the intercepted communications, which were of little relevance to the damages claim itself, remained in issue. While Mr Dotcom was determined to find out what they were, there was no wider public interest in doing so, especially in the face of Mr Grieve’s advice.
Mr Cogan argued that the difficulty for a person having to decide whether or not to oppose a s 70 application is that they do not know either the context or the grounds for the application. As he put it, that information is all within a “black box” which is accessible only by the special advocate or amicus. However, he accepted the proposition that there must be a middle ground and that it is not unreasonable, even in the context of a s 70 application, to expect a litigant to act reasonably.
We do not accept the proposition that by its very nature a s 70 application is properly characterised as a matter of public interest. We consider that the costs outcome in relation to a s 70 application should be governed by the normal rules. The result of an application and whether any opposition to it was reasonable will be significant factors. Consequently, we are unpersuaded that awarding costs on successful applications will necessarily have the chilling effect suggested.
This is not a case of the type described by Mr Cogan where an opponent is so uninformed that they should be immune from the costs implications of an unsuccessful opposition. Mr Grieve had secured the de-redaction of a significant volume of the discovered material. He nevertheless considered that the application was justified in respect of the raw communications. He advised Mr Dotcom accordingly. Furthermore, Mr Dotcom was aware of the general nature of the disputed information. Although his submission stated that the GCSB did not disclose the content of the intercepted communications “in any form”, Mr Boldt observed that that overlooked the fact that summaries, prepared with Mr Grieve’s assistance, were provided. In its 2019 judgment, this Court stated it was satisfied that such summaries would permit a fair trial.[80] Mr Dotcom was also on notice that the GCSB would seek to recover costs in connection with the secure hearing which was required.
[80] 2019 Court of Appeal judgment, above n 60, at [70].
This Court concluded in its 2019 judgment that “not by a small margin” the balancing exercise favoured non-disclosure.[81] In light of that conclusion and the circumstances discussed above, we consider that the Judge’s exercise of his discretion to award costs in favour of the GCSB was entirely orthodox and ought not to be disturbed.
Costs
[81]At [73].
As the two appeals were heard together, costs for appearances ought to reflect this. For calculation purposes, the time for the appearances should be a half day for each appeal. With this modification, we subsequently direct that costs are awarded as follows:
(a)in CA426/2022 the appellant must pay the respondents costs for a standard appeal on a band A basis and usual disbursements; and
(b)in CA636/2022 the appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
Result
The appeal in CA426/2022 is dismissed.
The appeal in CA636/2022 is dismissed.
Costs are awarded in accordance with the directions at [97].
Solicitors:
Mackenzie Elvin, Tauranga for Appellant
Te Tari Ture o te Karauna | Crown Law Office, Wellington for Respondent
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