K v Inland Revenue Department
[2013] NZHC 2426
•17 September 2013
NOTE: PUBLICATION OF NAME(S), ADDRESS(ES), OCCUPATION(S) OR IDENTIFYING PARTICULARS OF APPELLANT PROHIBITED BY S 200
OF THE CRIMINAL PROCEDURE ACT 2011.
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CRI-2013-485-0058 [2013] NZHC 2426
K
v
INLAND REVENUE DEPARTMENT
Hearing: 20 August 2013
Counsel: C R Carruthers QC and J H Coleman for Appellant
M J Ferrier and A Instone for Respondent
Judgment: 17 September 2013
JUDGMENT OF WILLIAMS J
Introduction
[1] The appellant, K, seeks permanent suppression of his name, address, occupation and identifying particulars relating to his conviction and sentence pursuant to s 200 of the Criminal Procedure Act 2011. His application was dismissed in the District Court. K now appeals to this court.
[2] The appellant pleaded guilty in the District Court to six counts of knowingly providing false tax returns under s 143A of the Tax Administration Act 1994. He was sentenced on 15 February 2013 to three months’ home detention and 150 hours’
community work.
K v INLAND REVENUE DEPARTMENT [2013] NZHC 2426 [17 September 2013]
[3] On 24 July 2013, Judge Barry eventually declined the application for permanent name suppression.1 As far as I am able to deduce from the file, submissions on permanent name suppression had been heard before that Judge at sentencing in the District Court in February 2013, but submissions had in fact been filed in November of the previous year. It was through no fault of the Judge that he came to deal with that application nine months later and four months after sentence.
The appellant had interim name suppression until sentencing on 15 February 2013. He was then due to appear as a witness in a High Court trial relating to certain of his co-offenders. The learned District Court Judge ordered that interim name suppression continue until the High Court had addressed suppression orders in that case.
[4] Unbeknown to Judge Barry, Simon France J (the trial Judge in the High Court) then issued a minute inviting the District Court to take the lead on name suppression in the case of the appellant. Simon France J’s attitude to the suppression of K’s name was, he said, likely to be very much affected by the District Court’s view of suppression in relation to the witness’ own convictions. Judge Barry did not receive that minute for two months. He issued his decision on name suppression immediately after the minute was brought to his attention. This unfortunate string of delays created the lengthy gap between the point at which the Judge received evidence and submissions on suppression, and the point at which a decision was finally issued.
Facts
[5] The appellant is the principal in a tax and an accounting firm. He was charged jointly as a party with Brent Gilchrist and Scott Anderson as principals. Messrs Gilchrist and Anderson were tried in the High Court. They generated fake invoices to the firm for information technology services totalling, across three invoices, $137,000. 91.5 per cent of the amount the firm paid to Messrs Gilchrist and Anderson was then remitted back to the appellant via a Vanuatu bank account. Gilchrist and Anderson retained the remainder as their fee. On behalf of his company, the appellant then claimed both GST and income tax deductions for the
false invoices. The total loss to the Revenue was $55,737.50. This offending took place in the 2006 and 2007 tax years.
[6] As a result of these convictions, the appellant lost his IRD status as a registered tax agent under s 34B of the Tax Administration Act 1994. The appellant is no longer listed as a chartered accountant on the New Zealand Institute of Chartered Accountants website. He is likely to face professional disciplinary proceedings.
[7] The appellant remains a principal of his original firm and, since sentencing I
understand he has created a second business focusing on taxation advice.
The District Court decision
[8] The appellant submitted that publication would be likely to cause extreme hardship by aggravating his mental health condition, affecting his business and his ability to earn a livelihood, and by creating suspicion that he was involved in the more serious offending alleged against his co-offenders in the High Court.2
[9] The appellant submitted a number of documents in support of his application, namely:
(a) A comprehensive Mental Health Assessment from Pacific Addiction and General Counselling Services. The assessment, dated 25 October
2012, details the appellant’s feelings of anxiety, stress, depression and suicidal ideation as a result of the IRD investigation into his accounting business. It notes that the appellant is on medication for depression.
(b)Three separate reports from the Capital and Coast District Health Board dated 26 June 2012, 10 July 2012 and 18 July 2012. The reports provide details of the appellant’s interaction with mental health services.
(c) A letter from a clinical psychologist stating that the appellant has
Asperger’s Syndrome.3
[10] In coming to his decision, Judge Barry began by outlining the principles relating to “extreme hardship”. The exercise of determining whether extreme hardship is made out involves an objective assessment of the circumstances of the offending and of the offender, including consideration of whether the hardship to a defendant from publication would be disproportionate to the public interest in the application of the open justice principle. He also noted that if the consequences were
foreseeable by an offender, it would be more difficult to claim hardship.4
[11] Applying these principles, the Judge first looked at the seriousness of the offending. He noted that it was a serious example of calculated dishonesty by a person working in a position of professional trust. That was tempered by the appellant’s repayment of all funds he obtained through fraud; the appellant’s acknowledgment of responsibility; and the fact that the appellant’s offending involved his own personal tax affairs rather than the affairs of his clients. The Judge concluded that “on a spectrum of seriousness, it [the offending] lies just under the mid-level range reflected in that starting point [of one year and eight months imprisonment]”.
[12] In relation to the mental health of the appellant, the Judge said that it appeared the appellant’s mental state was brought on by his offending rather than his conviction or by the prospect of publication, neither of which had occurred when his mental health deteriorated. The Judge found that there was no actual evidence that publication might aggravate the appellant’s mental state and even if there was, that
factor did not outweigh the considerations in favour of publication.5
[13] In relation to the appellant’s diagnosis of Asperger’s Syndrome, the Judge found that there was no evidence that publication would aggravate that condition.
3 The Judge’s findings on Asperger’s Syndrome are not challenged on appeal.
4 Police v Rihari HC Whangarei AP10/98, 23 July 1998.
5 R v K, above n 1, at [24]-[25].
And even if it did, that would be “an understandable consequence and certainly a foreseeable consequence of the offending itself”.6
[14] In relation to the business and financial consequences of publication the Judge concluded that the loss of professional accreditation and standing and the ability to pursue a livelihood through providing accounting services may be a result of publication but those were “entirely foreseeable consequences of the offending itself”.7 The Judge held that the impact of those foreseeable consequences was outweighed by the seriousness of the charge and the principle of open reporting. The Judge held that, in this case, the public interest in knowing the identity of persons involved in dishonesty against the IRD is high, particularly where that person is a
professional tax advisor.
Standard on appeal
[15] This is an appeal against a decision made in the exercise of a discretion.8 The appellant must show:9
(a) an error of law or principle;
(b) the taking account of irrelevant considerations;
(c) failure to take account of a relevant consideration; or
(d) that the decision is plainly wrong.
The relevant provision
[16] Section 200 of the Criminal Procedure Act 2011 governs the exercise of judicial discretion in this case. It relevantly provides as follows:
6 At [25].
7 At [27].
8 Bruce Robertson (ed) Adams on Criminal Law (online looseleaf ed, Brookers) at [CPA287.03];
B (CA860/10) v R [2011] NZCA 331 at [9]-[10].
9 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32]; May v May (1982) 1 NZFLR 165 (CA) at 170.
Court may suppress identity of defendant
(1) A court may make an order forbidding publication of the name, address, or occupation of a person who is charged with, or convicted or acquitted of, an offence.
(2) The court may make an order under subsection (1) only if the court is satisfied that publication would be likely to–
(a) cause extreme hardship to the person charged with, or convicted of, or acquitted of the offence, or any person connected with that person; or
…
(e) endanger the safety of any person;
…
[17] The principles underlying name suppression are well established. The starting point is a presumption in favour of open reporting. That presumption reflects the principles of open justice and freedom of speech. The discretion to prohibit publication should be exercised sparingly and only as an exception to the general rule that the community is entitled to know the identity of people coming before the courts.
Grounds of appeal
[18] The grounds of appeal are that Judge Barry erred by:
(a) placing foreseeability of consequences as an additional gloss on the
test for “extreme hardship”; and
(b)failing to take into account two separate relevant considerations, namely evidence that publication would aggravate the appellant’s mental health issues and evidence that publication may lead to loss of professional accreditation and standing.
[19] The appellant also seeks to rely on new evidence concerning the mental health of his wife. The appellant applies for leave to adduce new evidence on that subject. The respondent does not oppose that application. I will refer to the appellant’s wife as Mrs K for the remainder of the judgment.
[20] Mr Carruthers QC added a further ground in oral submissions. He argued that the appellant gave evidence for the Crown in collateral prosecutions against other tax fraudsters. It was, Mr Carruthers said, consistent with the ends of justice to encourage people in the appellant’s position to come forward in such prosecutions. One important incentive, he argued, was the provision to such people of name suppression.
Did the District Court apply a wrong principle?
[21] Mr Carruthers QC argued that the learned Judge at [19] and [21] drew the wrong test from the decision of Laurenson J in Police v Rihari and so applied a wrong principle.10 The Judge in the District Court erred, it was submitted, in concluding that if the consequences of publication were “foreseeable by an offender, it would be more difficult to claim extreme hardship.”11
[22] The Judge went on to say:12
Thus, it is looking at those cases (sic), it becomes clear that extreme hardship must be viewed in the more rigorous context of the relationship, in this case, between any particular hardship and the fundamental presumption of open reporting of proceedings alongside the seriousness of the offending and whether such publication consequences would be apparent to an offender from the outset. (My emphasis)
[23] Mr Carruthers QC argued that foreseeability is not relevant in determining whether the consequences involved undue hardship. Undue hardship can be entirely foreseeable in some circumstances, he argued.
[24] For the Crown, Mr Ferrier argued that Mr Carruthers had misunderstood the thrust of the learned Judge’s comment. He argued that the cases on extreme hardship all raised predictability of consequence as a relevant factor in assessing extreme hardship – relevant but not decisive. Mr Ferrier pointed to Proctor v R,13 R v
Liddell,14 and Lewis v Wilson & Horton15 in which, in each case, the court in
10 Police v Rihari above n 4.
11 R v K, above n 1, at [19].
12 At [21].
13 Proctor v R [1997] 1 NZLR 295 (CA).
14 R v Liddell [1995] 1 NZLR 538.
15 Lewis v Wilson & Horton [2000] 3 NZLR 546 (CA).
question emphasised that the consequences in issue in those cases were predictable and expected. By that it was meant not out of the ordinary.
[25] I agree with Mr Ferrier. The cases do not suggest that reasonable foreseeability is a disqualifying characteristic in demonstrating extreme hardship. They simply point out that if a consequence is reasonably to be expected, then it is harder to argue extreme hardship since it involves a hardship that affects all or most people in such circumstances. The more usual or ordinary the consequence, the more likely it is to be seen as just deserts. At [19] and [21] of his judgment, the learned Judge was simply making that obvious point.
Did the District Court fail to take account of the aggravating effect of
publication on the appellant’s existing mental health condition?
[26] The appellant argued that the learned Judge misconstrued the evidence. He found, the appellant says, that the appellant’s own acknowledged mental health issues were a result of his conviction rather than the prospect of publication of his details.
[27] Mr Carruthers argued that the clinician’s reports available to the Judge,16 made it clear that the prospect of publication was very much an aggravating factor in the state of the appellant’s mental health.
[28] The Crown argued that although, having considered the reports, the learned Judge took the view that the reports suggested that the cause was the offending rather than publication or conviction, the Judge accepted the hypothesis that publication might aggravate existing symptoms but concluded that such a nexus was not enough to overcome the presumption of publication.
[29] The Crown argued that this demonstrated that the Judge had considered the issue but had taken the view that it was outweighed by other considerations. That
16 Pacific Addiction and General Counselling Services Mental Health Assessment dated 25 October
2012; Capital and Coast District Health Board report dated 26 June 2012; Capital and Coast District Health Board report dated 10 July 2012; and Capital and Coast District Health Board report dated 18 July 2012.
evaluation process, in accordance with the principles in May v May, was for the
Judge at first instance, and cannot be interfered with on appeal.
[30] The relevant paragraphs of the judgment are as follows:17
Against that, I look at the circumstances of [K] as the offender: Firstly, the possible aggravation of mental health issues. The reports that I have from back in late 2012 chronicle the onset of depression, anxiety, suicidal ideation in the face of the investigation and the resultant prosecution for this offending. That mental state, it seems, was brought on by the offending, not by either publication nor of conviction, neither of which had occurred at that point. [K] can be seen in the reports as seeking early treatment for those problems and it seems responding to that treatment since at least June 2012.
It may be that publication might aggravate those symptoms. There is, however, no actual evidence of that. Even if it were so, when weighed of itself in the balance against the seriousness of the offending and the mandate for open reporting, it does not swing the balance in favour of suppression. The diagnosis of Aspergers Syndrome likewise carries with it no evidence that the condition would be aggravated by publication. The inference is that [K] must have lived with that syndrome for many years prior to its diagnosis. Publication, if it did have some effect in relation to that syndrome, again does not seem to be anything more than an understandable consequence and certainly a foreseeable consequence of the offending itself.
[31] I accept that the mental health reports referred to by Mr Carruthers, and available to the Judge, can be interpreted as suggesting that the appellant’s fear of the consequences of the criminal investigation process had been both causative and aggravating of his poor state of mental health. Those consequences would of course have included the risk of both conviction and publication. This is hardly surprising. There would obviously be both social and economic effects arising from it being made known to the public generally that the appellant had been convicted of significant tax fraud.
[32] As the Judge makes clear however, even if a causal nexus were clearly established between K’s mental state and publication, it would not have outweighed the statutory mandate for “open reporting” of serious offending. I am not at all convinced that in this respect the Judge was “plainly wrong”. On the contrary, in the evaluative exercise reflected in those comments, in my view, the Judge was plainly right.
Did the learned Judge disregard evidence of the devastating effect on the
appellant’s business?
[33] Under this head, the appellant argued that the learned Judge disregarded evidence of the likelihood that publication would destroy the appellant’s business – particularly that contained in the affidavit of Mohammed Buksh filed for the permanent suppression hearing. Mr Carruthers argued that the Judge was wrong in concluding that he was “not in possession of any information either way that the fact of the convictions may lead to loss of professional accreditation and standing.” In this it was argued that the learned Judge failed to take account of relevant considerations.
[34] The respondent accepted that the learned Judge may have been in error in that respect but pointed to the fact that, in his reasoning, he found that even if it were possible to attribute all financial and business impact to publication, these must still be seen as ordinary consequences of the offending.
[35] For a number of reasons, I agree with the respondent on this point.
[36] In his decision, the Judge found:18
… [T]he business and financial consequences of publication are difficult to extract from the consequences of the convictions themselves which may unfold with professional sanction over time. But taking those consequences at their highest and attributing their consequences to publication, that is the inability to practice as a chartered accountant with the accompanying inability to earn an income from that profession, those consequences are harsh, but they were never unforeseeable and they were never out of the ordinary as adjuncts to dishonesty offending by a chartered accountant whose possible loss of professional standing and accreditation must have obviously been the downside of any benefits in the short term of actual offending.
[37] First, as other affidavit evidence shows, some business consequences of this offending will arise from the refusal of the IRD to maintain the appellant and his firm as a registered tax agency. As Ms Cross says in her affidavit, clients are unlikely to come to accountants who cannot take full care of the client’s tax affairs. Similarly, disciplinary sanctions from the Institute of Chartered Accountants may
well make it impossible for the appellant to undertake some accounting work. These impacts are unrelated to publication.
[38] It may be that the Judge overlooked the evidence of business impact. The problem in this case was that, it seems the learned Judge heard the submissions on suppression at a much earlier date, 15 February 2013, before pulling back in deference to any view Simon France J might have.
[39] That said, there is no doubt that publication will have a significant effect on market perceptions of the appellant’s honesty and integrity, and those impacts are likely to be significant and negative. That much is obvious and was obvious to the learned Judge. He turned his mind to that likelihood and concluded that he did not think such impacts were going to be enough anyway. That in my view, was not only a judgement for him to make, it was a judgement with which I wholly agree.
[40] Business impacts will arise from existing or potential clients deciding they do not want their accounting done by an accountant who has been found to be dishonest. Such impacts are exactly what one would expect. The principle of open justice is designed to ensure those consumers can make properly informed choices.
Administration of justice
[41] Here the appellant argued that it is in the interests of justice to grant suppression to co-offending witnesses who give evidence for the Crown. It is important, Mr Carruthers argued, to avoid disincentivising offenders from assisting the prosecution. The argument was that if suppression followed in such circumstances, it would encourage co-offending parties such as the appellant in this case, to come forward.
[42] For the respondent, the argument was that the primary incentive for co- offenders to assist the prosecution is the impact of such assistance on sentence.
[43] The respondent’s argument is to be preferred here. The appellant was given a
light sentence in part, as the Judge’s sentencing notes make plain, due to his co-
operation in the prosecution of the defendants Gilchrist and Anderson.19
Suppression will always be a relatively ancillary matter to the primary advantage of a significantly reduced penalty.
Application for leave to file evidence relating to Mrs K’s health
[44] The appellant also applies for leave to adduce the following evidence relating to Mrs K’s health:
(a) his own affidavit outlining Mrs K’s mental condition;20 and
(b)a report from Pacific Addiction and General Counselling Services in relation to Mrs K.
[45] The Crown does not oppose the appellant’s application.
[46] The appellant states in his affidavit that during his court proceedings Mrs K received ongoing counselling to control her stress and depression. When she found out that the appellant had been declined name suppression, she attempted to commit suicide. He discovered her and contacted emergency services, who took her to hospital for treatment.
[47] The report from Pacific Addiction and General Counselling Services states that Mrs K is being closely monitored and receiving counselling on a daily basis and describes her as being at a “very high risk of committing suicide”. In the author’s view, publication of the appellant’s name will cause Mrs K’s mental health to deteriorate and would heighten the risk of her suicide.
[48] It is appropriate to grant leave to adduce the new evidence. The evidence is plainly relevant to the issue of name suppression and it could not have been called in
the District Court because the events described occurred after the hearing.
19 Inland Revenue Department v K DC Wellington CRI-2012-085-8280, 15 February 2013 at [32].
20 The appellant explained that Mrs K did not swear an affidavit herself because of her fragile mental condition.
Should name suppression be granted under s 200(2)(e)?
[49] The appellant submitted that this fresh evidence satisfies s 200(2)(e) of the Act, the provision that, it will be recalled, allows the court to order suppression where publication will endanger the safety of any person.
[50] The Crown made two submissions in opposition. First, it was submitted that Parliament did not intend s 200(2)(e) to apply “in the case of hardship which could otherwise be considered under s 200(2)(a)”. Instead, the section was designed to protect individuals from risk of actual physical harm because of vigilantism or retribution. In support of this argument, the Crown referred to two sources:
(a) A paper issued by the Law Commission as part of its 2008 review of suppression under the Criminal Justice Act 1985:21
The Official Information Act 1982 and Criminal Disclosure Act
2008 also recognise as a ground for withholding information that disclosure would endanger the safety of any person. It is
not difficult to envisage circumstances where the publication of
evidence could create a risk of retribution, thereby endangering the safety of a victim or witness. We suggest
that an appropriate ground for suppression of evidence is that
publication would endanger the safety of any person. [Emphasis added].
(b)The current commentary from Adams on Criminal Law on s 200(2)(e):22
Where the publication of a defendant’s name would, for example, result in the intimidation or victimisation of a witness, or in post-trial retribution, a suppression order may be justified. The words “any person” include people who are not involved in the proceedings (such as the family of a witness) and would also appear to include the defendant and any co-defendant. In respect of a defendant, this ground supplements the “extreme hardship” ground in para (a). It may be applicable in cases where a defendant has provided assistance to the authorities and there are fears of retribution if his or her name were published.23
21 Law Commission Suppressing Names and Evidence (NZLC IP13, 2008) at 18.
22 Bruce Robertson (ed) Adams on Criminal Law (online looseleaf ed, Brookers,) CPA200.020(5).
23 See Broadcasting Corporation of New Zealand v Attorney-General [1982] 1 NZLR 120 (CA) at
126, 130 and 135; A v R HC Auckland T982337, 28 April 1999.
[51] While the Law Commission report in particular, suggests that danger to the safety of a defendant’s family was not in the contemplation of those whose recommendations produced the legislation, even less, self inflicted danger, the wording of s 200(2)(e) is clear and broad. It suggests that the open justice principle is not so powerful that it provides a reason to place individuals in harm’s way. That limit on open justice makes good sense. Nor does the provision contain any restriction on the ways in which the safety of individuals can be endangered. There is certainly no good reason to read the restrictions suggested by the Crown into the wording. If open justice will put individuals in danger, for any reason, the court has the power (and indeed ought to have the power) to prevent that occurring.
[52] This is confirmed in the recent decision of Brewer J in GWS v Police, in which name suppression was granted to two accused because there was a real risk that publication of their names would endanger the safety of their daughter.24 In that case, there was medical evidence from a psychiatrist that publication of her parents’ names could lead to a relapse in the daughter’s depressive and suicidal symptoms.
[53] The Crown’s second submission was that the standard for suppression under ss 200(2)(a) and (e) should be the same where the danger is to a person connected to the accused. That would, the Crown argued, be consistent with Parliament’s intention for the Act to raise the bar for name suppression.
[54] In my view, that suggestion is also inconsistent with a plain reading of the provision. Section 200(2)(e) is satisfied if there is evidence of a real risk that publication would endanger “any person”. I see no reason to import a different standard simply because the person concerned is the offender’s wife. That would be discriminatory and irrational. Connectedness does not disqualify an otherwise deserving “person” from obtaining protection under s 200(2)(e).
[55] That is not to say the open justice principle is rendered wholly irrelevant when danger to a person’s safety is established. As always, the issue becomes one of proportionality. The nature and extent of danger must be weighed against the
importance of open justice. That value will be particularly important where, as here,
24 GWS v Police [2013] NZHC 943.
open justice has a practical purpose in warning unknowing users of accounting
services, of K’s past dishonesty.
[56] I turn now to whether Mrs K’s circumstances meet the threshold in s 200(2)(e). In my view, it does. There is a clear link between publication and the danger to Mrs K. The evidence shows that Mrs K attempted suicide when she found out that name suppression had been declined and the author of the report stated that, in her clinical assessment, publication would cause Mrs K’s mental health to deteriorate and indeed could lead to her suicide. On that basis, I find the evidence demonstrates that there is a real risk that publication would be likely to endanger Mrs K’s safety.
[57] I turn now to the balancing exercise. In considering whether the powers given by s 200 should be exercised, the starting point should always be the importance in a democracy of freedom of speech, open judicial proceedings, and the right of the media to report judicial proceedings. These principles have been stressed by the Court of Appeal in a long line of cases and should only be departed from in
very special circumstances.25 And as I have said, these principles are of practical
importance here.
[58] I agree with Judge Barry’s analysis of the seriousness of the appellant’s offending and with his summation of the strong public interest in knowing the identity of a professional tax advisor involved in dishonesty against the IRD. I also accept the Crown’s submission that one of the purposes of s 200 was to raise the bar
and enact a more stringent test for obtaining name suppression.26
[59] Against those considerations however, there is independent clinical evidence that indicates publication could well lead to a second and perhaps successful suicide attempt by Mrs K. This case is distinguishable from other situations where there was a risk of suicide, but no attempt had actually been made. The Crown
(understandably) makes no argument that the first suicide attempt was other than
25 See for example, R v Liddell, above n 13; R v B [2008] NZCA 130.
26 RM v Police [2012] NZHC 2080.
genuine. Nor is it argued that there was no causal nexus between the prospect of publication and the suicide attempt.
[60] I do not think that refusing publication in this case lowers the bar for future name suppression applications. There is no risk of floodgates opening here. It will be for each Judge to assess the individual facts of an application before him or her and to determine whether they establish the kind of genuinely exceptional circumstances that exist here. Judges will no doubt be alive to undeserving, self- serving or contrived applications.
[61] In the end, I am persuaded by a clear margin that in the exceptional circumstances of this case, the need to protect Mrs K’s wellbeing outweighs the strong public interest in revealing the appellant’s name.
[62] The appeal is allowed accordingly. There is an order for permanent suppression of any details likely to lead to the identification of the defendant.
Williams J
Solicitors:
C R Carruthers QC, Wellington
Crown Solicitors, Wellington
12