Gama Foundation v Chief Executive of the Ministry of Social Development

[2021] NZHC 3146

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-334

[2021] NZHC 3146

UNDER

the Judicial Review Procedure Act 2016

IN THE MATTER

of an application for judicial review of decisions of the Ministry of Social Development

BETWEEN

THE GAMA FOUNDATION

Applicant

AND

THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT

First Respondent

THE ATTORNEY-GENERAL OF NEW ZEALAND

Second Respondent

Hearing:	19 November 2021
Appearances:	T Mijatov and M C McCarthy for the Applicant N Wills and S P R Conway for the Respondents
Judgment:	22 November 2021

JUDGMENT OF COOKE J

(Discovery)

[1]                 In these proceedings the applicant challenges what is alleged to be an unlawful failure by the respondents to prosecute those who improperly took and/or retained the Government’s COVID-19 wage subsidy payments.

[2]                 By judgment dated 6 September 2021 I declined the respondents’ application that the applicant provide further and better particulars of its claim before they were required to file a statement of defence. That was because the particulars sought in

THE GAMA FOUNDATION v THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT [2021] NZHC 3146 [22 November 2021]

relation to decisions on individual cases was within the knowledge of the respondents alone. I said:1

… as Ms Wills accepted in her submissions a challenge can be advanced without reference to particular decisions. Moreover the applicant does not have information about individual cases. In my view there is no point in directing the applicant to provide particulars that it simply cannot provide because it does not have the knowledge to give them. It is entitled to advance this challenge on the basis that the absence of any prosecutions and other materials give rise to an inference that there is a deficiency of the kind that it has pleaded. In the absence of a formal policy document the challenge will likely involve an assessment of the actions taken by the respondents on particular files, and why they did not lead to prosecution. As Mr Mijatov emphasised the claim refers to an alleged practice as well as an alleged policy.

Once it is accepted that such a challenge may be advanced, this matter simply becomes one of efficient case management.

[3]                 I directed that further particulars could be provided after discovery had taken place. I also suggested that the scope of discovery should then be discussed between the parties. There were such discussions, but no agreement was reached. By memorandum dated 20 October counsel for the applicant have explained what documents it sought by way of discovery, and the basis upon which it sought those documents, and by memorandum dated 26 October counsel for the respondents indicated that the discovery of all but one category was opposed. Following a further memorandum of counsel for the applicant I set the dispute about discovery down for consideration at a conference before me on 19 November and heard oral argument.

What is sought by way of discovery?

[4]                 The applicants are essentially seeking documents that allow them to be informed about individual decisions that have been made concerning the prosecution of those said to have illegitimately claimed the wage subsidy. The categories sought were outlined in the following way:

Cat.	Description
1.	Anonymised documents comprising case files for each case referred for investigation (not including open investigation files), but including documents recording any decision not to prosecute a wage subsidy recipient where MSD or its Prosecution Panel has determined that:

1      The GAMA Foundation v The Chief Executive of the Ministry of Social Development [2021] NZHC 2321 at [8]–[9].

a)        the evidential test is not met; and/or

b)       the public interest test is not met; and/or

c)        other (non-prosecution, including civil) enforcement action is to be taken instead.

2.

Anonymised copies of the documents comprising the 100 case files representing the recipients of the greatest sums of wage subsidy payments that are not represented by category 1 above, and which have not repaid part or all of the wage subsidy.

3.

Anonymised copies of documents comprising a further randomly selected 100 case files representing recipients of the wage subsidy payments that are not represented by categories 1-2 above, and which have not repaid part or all of the wage subsidy

4.

Documents recording any decisions by MSD not to write to every wage subsidy recipient requiring them to provide evidence of eligibility.

5.

Documents which are guides, policies or information created for or by MSD to inform decisions whether or not to take enforcement action in respect of wage subsidy recipients.

[5]                 The respondents accept that the documents in category 5 can be discovered, and documents have been provided in this category, but say the documents in categories 1–4 are not relevant to the claim as pleaded.

Relevant principles

[6]                 The scope of orders by way of disclosure, or discovery in judicial review proceedings is properly dealt with under s 14(h) of the Judicial Review Procedure Act 2016. Section 14 partly operates as a procedural code of its own for judicial review.2

[7]                 Mr Mijatov referred to this Court’s observations in New Zealand Steel Ltd v Minister of Commerce and Consumer Affairs that there was no real difference between the test for discovery in a judicial review proceeding and an ordinary proceeding. This was because discovery must still reflect the issues in the case, and context relevance and proportionality remain the touchstones.3

2      See Minister of Energy v Petrocorp Exploration Ltd [1989] 1 NZLR 348 (CA) at 353; Roussel Uclaf Australia Pty Ltd v Pharmaceutical Management Agency Ltd [1997] 1 NZLR 650 (CA) at 656–658; Ngāti Tama Ki Te Waipounamu Trust v Tasman District Council [2018] NZHC 2166, [2017] 20 ELRNZ 105, [2017] NZRMA 269 at [19].

3      New Zealand Steel Ltd v Minister of Commerce and Consumer Affairs [2017] NZHC 3232, (2017) 24 PRNZ 409 at [18]–[29].

[8]                 But the requirement for relevance and proportionality are particularly important in judicial review. As Miller J said in Te Runanga O Ngati Awa v Attorney- General:4

It is common ground that discovery is available in judicial review, although it is discretionary. Mr Kos maintained however, that there is no significant difference in principle between discovery in judicial review and in regular civil proceedings, citing Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 63 (CA). I prefer the view that judicial review is a relatively simple, untechnical and prompt procedure, and that Judges are responsible for narrowing issues and supervising the proceeding to ensure that the material placed before the Court is reduced to the necessary minimum: BNZ Investments Limited v CIR (CIV 2006-485-697, HC Wellington, 7 December 2006, Wild J). The material must be both relevant to the proceeding and necessary in the circumstances. In many cases, there is no room for the Peruvian Guano “train of inquiry” test.

[9]                 This seems to me to properly encapsulate the correct approach. As Williams J explained in Ririnui v Landcorp Farming Ltd (No 1):5

Discovery is not usually granted in judicial review proceedings, for the most part because it is unnecessary. Public authorities usually disclose relevant documentation in affidavit evidence without the need for specific orders. And, as it is often said, judicial review is intended to be a short and simple means by which to test the legality of public sector decision-making affecting ordinary citizens. But on the face of it, such documents as are sought here are within the penumbra of the claim as put by the plaintiff. They are prima facie relevant.

[10]             In the end the Court must make an assessment of what discovery is required to enable the applicant to fairly argue its case, whilst at the same time ensuring that the materials remain relevant, and the requirements are consistent with the objective of judicial review being a simple, untechnical and prompt procedure.

Assessment

[11]             Against that background, and as I observed at the hearing, I do not think that either party has adopted a legitimate stance.

4      Te Runanga O Ngati Awa v Attorney-General Wellington CIV-2006-485-1025, 28 March 2007 at [6].

5      Ririnui v Landcorp Farming Ltd (No 1) [2014] NZHC 732 at [5].

[12]             Contrary to the respondents’ submissions I accept that the documents sought by the applicants are relevant to the claim as advanced. As I explained in the judgment concerning the request for particulars, in the absence of a formal policy document of a comprehensive nature the allegations that the applicants make in relation to the policy or practices applied in relation to the potential prosecution of those allegedly misusing the wage subsidy scheme will likely involve some consideration of individual cases. Ms Wills relied on Attorney-General v Refugee Council where the Court of Appeal concluded that a challenge to immigration instructions should not be influenced by the individual decisions made in the application of those instructions, and Smith v Attorney-General where the High Court was critical of using evidence about individual cases as a process of “reverse engineering” a challenge to the legitimacy of a policy.6 But here there is no policy that has been enacted as subordinate legislation as is the case with immigration instructions. Neither can it be said that the applicant is seeking to reverse engineer a challenge. What the policy or practice actually is is squarely a live issue, and the applicant has a basis to advance the challenge given the lack of any prosecution action until last month, and the materials that have been referred to showing a level of criticism of the lack of prosecution.

[13]             Documents relating to the policies or practices adopted, including as reflected in individual cases, are accordingly relevant. Indeed the respondents themselves sought particulars of the individual cases that were relied on by the applicant. I declined that application on the basis that the respondents needed to give discovery first before such particularisation could be required. I do not see how the respondents can then contend that this material is not relevant.

[14]             But the scope of the material that the applicant seeks to have discovered goes beyond what would be necessary to fairly address the challenge. Individual cases are only relevant to the extent that they evidence an alleged unlawful policy or practice. The respondents cannot be required to give discovery of all of the thousands of cases where the wage subsidy has been paid, or the more limited cases where a subsidy has been repaid, or even all cases where enforcement action has been considered. In effect the applicant’s categories 1–4 suggest that such discovery is required, albeit an attempt

6      Attorney-General v Refugee Council [2003] 2 NZLR 577 (CA) at [30]; Smith v Attorney-General

(temporary release) [2019] NZHC 35 at [85].

has been made to confine the required disclosure to representative samples through categories 2 and 3.

[15]             It is significant that the applicant currently has no basis to advance a challenge in relation to individual prosecution decisions. It has no information that would allow it to make such allegations. The applicant nevertheless has an evidential foundation to challenge a general practice or policy applied by the respondents. It may well be that discovery in relation to the practices or policies may result in the applicant challenging decisions on individual files. But the applicant cannot claim an entitlement to obtain discovery of all individual files, or even representative samples, in order to review them for the purposes of assessing whether to challenge individual decisions. That runs the risk of becoming a fishing expedition.

[16]             I accept, however, that it may become necessary to review how the respondents have dealt with individual cases in order to properly assess the alleged practice or policy not to prosecute, or only prosecute in very limited circumstances. Provided it is proportionate, discovery should be ordered directed to that issue.

[17]             As discussed with counsel at the hearing I have decided the appropriate course is to defer any question of further discovery pending the provision of further information by the respondents by other means. In Independent Fisheries v Minister of Canterbury Earthquake Recovery the Court made orders under the equivalent of   s 14 requiring the Minister to file an affidavit, and provide tailored discovery, to allow the applicant to know the basis upon which decisions were made before it was required to advance its case.7 That is also the appropriate course here. The respondents themselves suggested such an approach. The respondents should be directed to provide an affidavit that fully explains the practices and policies that have been followed in investigating the legitimacy of claims for the wage subsidy, and the practices and policies that have been followed in relation to the potential prosecution of those thought not to have legitimately claimed the subsidy. The expectation is that this affidavit will be full and frank, and that the relevant documents associated with

7      Independent Fisheries v Minister of Canterbury Earthquake Recovery [2014] NZHC 959 at [24]– [25].

these practices and policies will be provided either as exhibited to that affidavit or by way of disclosure provided at the same time.

[18]For the avoidance of doubt that affidavit should address:

(a)The details and operation of the wage subsidy scheme.

(b)The processes followed to review the legitimacy of the claims.

(c)The investigation and prosecution processes followed, including relevant case statistics.

(d)What category or cases were referred to the MSD panel, or any previous equivalent, and how those cases were decided to be dealt with.

(e)The tests applied in relation to prosecution, including what kinds of cases were referred for potential prosecution, and why decisions were made not to prosecute.

(f)How questions of evidential sufficiency were dealt with when prosecution decisions were considered, including what consideration was given to further utilise investigative powers.

(g)How the public interest in possible prosecution was addressed.

[19]             Once this affidavit is provided the applicant can pursue an application for further discovery. If any such application is made it will become necessary to focus on why the applicant says an unlawful policy or practice has been followed, and why further documents are needed to fairly address that challenge in the way outlined by Miller J in Te Runanga O Ngāti Awa.8 That would include clarity on what is being challenged by way of judicial review and why. There is no doubt that prosecution decisions may be challenged in judicial review proceedings.9 This can extend to

8      Te Runanga O Ngāti Awa v Attorney-General, above n 4

9      Osborne v WorkSafe New Zealand [2017] NZSC 175, [2018] 1 NZLR 447.

judicial  review  of  policy  decisions  not to prosecute.10     But precision on what is challenged, and the basis, will be important for any subsequent discovery argument.

[20]             Ms Wills indicated that no direction should be given at this stage that individual cases be described in this affidavit. I accept that I am not in a position to assess whether that is necessary or not. It is possible that a full description of the policy and practices, without providing details of individual cases, will provide sufficient information to fairly address the applicant’s challenge. Having said that it may become necessary, or at least helpful to use particular cases as examples of the policies and practices that have been followed such that some disclosure about individual cases (potentially with appropriate redactions) is directed. In the end it will be a matter of assessment whether the affidavit provided fairly addresses the position.

[21]             I accordingly direct the respondents to prepare, file and serve an affidavit meeting the requirements referred to above. I direct that this affidavit be filed and served by 26 February 2022. Following that a further judicial telephone conference should occur at which any further directions, including any application by the applicant for further discovery can be addressed.

[22]             Given my view that neither party adopted an appropriate approach, and that there has been a measure of success on both sides, costs will lie where they fall.

Cooke J

Solicitors:
Crown Law, Wellington for the Respondents

10     R v Commissioner of Police ex parte Blackburn [1968] 2 QB 118.