New Zealand First Party v Director of Serious Fraud Office

[2020] NZHC 2502

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ORDER PROHIBITING PUBLICATION OF THE JUDGMENT, THE APPLICATION AND ALL MATTERS RELATING TO IT UNTIL 5 PM FRIDAY 25 SEPTEMBER 2020 UNLESS THE COURT OTHERWISE ORDERS.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1721

[2020] NZHC 2502

BETWEEN

NEW ZEALAND FIRST PARTY

Applicant

AND

THE DIRECTOR OF THE SERIOUS FRAUD OFFICE

Respondent

Hearing:

23 September 2020

Appearances:

A F Pilditch for the applicant

J C L Dixon QC and R J Williams for the respondent

Judgment:

24 September 2020

JUDGMENT OF PALMER J

This judgment was delivered by me on Thursday, 24 September 2020 at 11.00am.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Solicitors:

A F Pilditch, Barrister, Auckland J C L Dixon QC, Auckland Cook Morris Quinn, Auckland Serious Fraud Office, Auckland

NEW ZEALAND FIRST PARTY v THE DIRECTOR OF THE SERIOUS FRAUD OFFICE [2020] NZHC 2502

[24 September 2020]

Summary

[1]                 The Director of the Serious Fraud Office (SFO) intends to issue a public statement announcing that the SFO has filed a criminal charge of “obtaining by deception” against two defendants in the New Zealand First Foundation (the Foundation) electoral funding case. The two defendants are not Ministers, sitting MPs, candidates at the election or members of their staff. The New Zealand First Party (NZ First) applies for orders prohibiting the Director from issuing the statement until after a government has been formed following the General Election on 17 October 2020. NZ First also applies for this application and all matters relating to it to be suppressed until the same time.

[2]                 I do not consider NZ First’s case for judicial review is particularly strong, on the basis of the evidence and information before me. There is no evidence before me that the Director’s decision to issue the public statement was influenced by political considerations or that the timeframe she announced for the investigation’s completion was set because of the election. I accept there is a risk of confusion and a negative impact on its electoral prospects. However, I consider there is a significant public interest in the New Zealand voting public being informed during an election campaign about criminal charges of serious fraud against people or organisations related to political parties. Ultimately, I consider the public interest in transparency outweighs the inconvenience of the announcement to NZ First. It will be up to the political system including the media, rather than the judicial system, to ensure the transparency of the announcement is not obscured by confusion and misinformation.

[3]                 In order to allow NZ First to consider this judgment and its position, I make an interim order suppressing the judgment, the application and all matters relating to it, which lapses at 5 pm Friday 25 September 2020 unless the Court otherwise orders.

What happened?

SFO statements

[4]                 NZ First is a registered political party. The Foundation is a trust with associations with NZ First, according to NZ First’s counsel, Mr Pilditch. On 18

February 2020, the SFO issued a press release announcing it had commenced an investigation in relation to the Foundation. The leader of NZ First, the Rt Hon Winston Peters, said publicly the same day that NZ First will “cooperate to the full”.1

[5]                 Subsequently, the SFO used its powers under the Serious Fraud Office Act 1990 to obtain information from a number of individuals. The legality of some exercises of those powers are disputed by Cook Morris Quinn, the solicitors acting for some of those individuals and for NZ First.

[6]On 21 April 2020, the Director of the SFO said to media:2

The SFO’s pre-lockdown timetable for the investigation in relation to the New Zealand First Foundation would see us completing the investigation before the September election date.

At this stage we are progressing the investigation under the current lockdown restrictions and are still on track to complete it within that timeframe.

However, our actual completion date will be dependent upon our ability to conduct certain interviews as well as other tasks which can only be completed at lower alert levels and the cooperation of those who hold information relevant to our investigation.

[7]The election was, at that time, expected to be held on 17 September 2020.

Correspondence between Cook Morris Quinn and the SFO

[8]                 In letters to the SFO on 1, 14 and 17 July 2020, NZ First’s lawyers, Cook Morris Quinn objected to the SFO indexing the timing of the investigation into the Foundation to the election. The second letter questioned the lack of a public statement concerning the timing of the investigation into the Labour Party which had been announced by then. I quote passages from the third letter that reflect the submissions by NZ First’s counsel at the hearing before me:3

8As we expressed in our 1 July 2020 letter it is difficult to fathom why there was any need for the Director to make public statements about the

1      Jason Walls “Serious Fraud Office investigation into NZ First Foundation underway” The New Zealand Herald (online ed, 18 February 2020).

2      This is the text quoted by the Director in her letter to Cook Morris Quinn of 27 July 2020. See Thomas Coughlan “SFO will complete NZ First Foundation investigation before election” Stuff (online ed, 21 April 2020) and Guyon Espiner “SFO decision over NZ First Foundation will come before election” RNZ (online ed, 21 April 2020).

3 Cook Morris Quinn to Serious Fraud Office, 17 July 2020, at [8].

Investigation, let alone communicate that a charging decision would be made prior to the general election. The timing of a general election is a wholly irrelevant consideration for the Director, a Chief Executive of a State Sector agency, to take into account in the conduct of an investigation and a charging decision. The proper course is for the Director to disregard as extraneous and irrelevant any political event including the general election, and to make a decision, based on the Investigation, when the Investigation is completed in a timely way and when all the facts are known and all matters are considered. Whether or not that point is reached before or after the general election is immaterial, and the Director never should have committed to making a decision within any specified timeframe referenced to the general election for these reasons.

9Based on the public statements made by the Director we conclude that: she is expediting the Investigation and a prosecution decision so it can be made prior to the general election, but there is no intention by her to complete the Labour Party investigation prior to the general election. Contrary to the statement that she is acting consistently, this clearly demonstrates inconsistency of treatment by the Director between two political parties being investigated in relation to the same issue.

…

13If the Director decides to charge any person following the Investigation, at law that simply amounts to an unproven and untested allegation against a person or people who have the presumption of innocence. The decision of the Director to charge a person or people is not, and cannot, resolve the issues underpinning the prosecution because only the criminal court can do that. Further, based on the matters raised by the Electoral Commission with NZ First, any prosecution is highly likely to be founded on disputed interpretations of the law.

14On the other hand this is not the way that a prosecution decision would be portrayed by the media or other political parties in the lead up to the general election, as the Director will well know. An adverse prosecution decision will, in the minds of the electorate, adversely impact on NZ First’s electoral campaign irrespective of the legal and factual merits of that allegation, which would not be tested at trial until 2021 or 2022, and could not be addressed publicly until after a trial. It is a smear, and one that NZ First could not respond to due to the proceedings being sub judice.

[9]On 27 July 2020, the Director of the SFO wrote to NZ First’s solicitors, saying:

2We categorically deny that our treatment of the investigation into the New Zealand First Foundation (NZFF) has been different to our treatment of the investigation into Labour Party donations or that it has been motivated by bias. The assumptions upon which you proceed in this regard are baseless. We note that the NZFF investigation was announced on 18 February 2020 and it was not until 21 April 2020 that a statement was made regarding the timeframe for the completion of the investigation.

3We will be making decisions about the New Zealand First Foundation matter in accordance with our usual processes.

4The media release relating to the Labour investigation is on the SFO website. It was              published   there         on       13    July  2020.

Morris Quinn wrote further letters to the SFO on 4 and 10 August 2020. The 4 August 2020 letter, among other things, complained no explanation for the urgency of the investigation had been provided, advised they had been instructed to take judicial review proceedings, and reiterated points made in previous letters. On 6 August 2020 the SFO apparently wrote to Cook Morris Quinn but I have not been given that letter. The 10 August 2020 letter from Cook Morris Quinn to the SFO required the Director to confirm whether or not she intended to make public a decision on the investigation before the election, citing a report to that effect, and saying:

Self-evidently, an adverse prosecution decision made about an investigation closely related to a political party, made within less than four weeks of a general election, will influence the vote. It will do so without opportunity for those charged, or the New Zealand First Party, to respond to any unproven allegations reflected in an adverse charging decision. We see strong parallels between this course of action and that of FBI Director James Comey’s letter to Congress on 28 October 2016. There can be little doubt that the publication of    this     event     destroyed     Hillary     Clinton’s     electoral     prospects ( despite Ms Clinton subsequently being vindicated. Once the untested, and ultimately fallacious allegation was published, the damage was done. Similar observations can be made about the ultimately unfounded allegations against New Zealand First investigated by the SFO in 2008. These instances demonstrate the point that ‘politically loaded’ disruptions have disproportionate effects during campaign periods.

[11]                On 12 August 2020, the Director of the SFO wrote to NZ First’s solicitors advising:

As we have previously informed you in our letter of 27 July 2020, we will be making decisions about the New Zealand First Foundation matter in accordance with our usual processes. At this stage we don’t know when or if an announcement will be made but we will contact you prior to any public announcement of the outcome of the investigation.

[12]              On Monday 17 August 2020, the Prime Minister announced the election would be delayed and held on Saturday 19 October 2020. That is now just over three weeks

away. Advance voting will be possible from Saturday 3 October 2020, in just over one week.

A proposed further statement

[13]              Around 10.25 am on Wednesday 23 September 2020, an SFO investigator advised NZ First’s solicitors that the Director intended to make a press release “mid- afternoon” that day, regarding charges being laid in SFO’s investigation into the Foundation. He advised no charges would be laid against any sitting Members of Parliament (MPs) or party personnel. At 11.09 am Cook Morris Quinn requested a copy of the intended press release.

NZ First application

[14]              At 11.42 am on Wednesday 23 September 2020, Cook Morris Quinn advised the SFO that NZ First had instructed it to apply urgently to the High Court for interim relief prohibiting the Director from making the intended press release. It invited a written undertaking or other confirmation that the press release would not be distributed until arrangements had been made with the court to deal with the application. The SFO did not reply.

[15]              NZ First foreshadows an application for judicial review to challenge the Director’s decision to complete the investigation before the election because it takes into account the date of the election, which it says is irrelevant, and fails to take into account the impact of the announcement on the election, which it says is relevant. NZ First has not yet filed a statement of claim.

[16]              In the meantime, NZ First applies for interim orders, with a supporting affidavit attaching correspondence between the parties, as outlined above (but without an undertaking as to damages). The interim orders sought are:

(a)to prohibit the Director from issuing a press release about the investigation into the Foundation until after a government has been formed following the General Election on 17 October 2020; and

(b)that this application and all matters relating to it are suppressed and to be kept confidential until after a government has been formed following the General Election on 17 October.

[17]              The application came to me as Duty Judge at 1.37 pm on Wednesday 23 September 2020. At 1.53 pm, I directed the application be served on the SFO on a Pickwick basis. I heard argument by the parties from 3.45 pm until around 5.30 pm on Wednesday 23 September 2020.

[18]              Mr Dixon QC, for the SFO, advises that the Director proposes to make the following public statement:

SFO files charges in relation to NZ First Foundation

The SFO has filed a charge of “Obtaining by deception” against two defendants in the New Zealand First Foundation electoral funding case.

As the defendants have a right to apply for name suppression, we are unable to name them at this time. We note, however, that neither defendant is a candidate in the upcoming election.

The SFO has no further comment.

[19]              Mr Dixon advised that the SFO would be prepared to add that neither defendant is a Minister, a sitting MP, a candidate or a member of the staff of a Minister or MP.

Submissions

[20]Mr Pilditch, for NZ First, submits:

(a)Publicity in the sensitive time close to an election can influence voters’ decisions and needs to be considered carefully, as noted in Dunne v Canwest.4 Publication of the outcome of the SFO’s investigation and/or this application is likely to impact on the outcome of the election because the election campaign is underway and early voting and the election itself will be held soon. An article on the Politik website reports concerns within NZ First that the SFO investigation could derail the party’s election campaign. Media articles handed to me by Mr

4      Dunne v CanWest TVWorks Ltd [2005] NZAR 577 at [34].

Dixon are replete with connections between NZ First and individual members who may be under investigation. The announcement will not name the individuals who may be facing charges so the public may incorrectly believe charges have been laid against sitting MPs or their staff and the general public is unlikely to distinguish between NZ First and the Foundation. The announcement will clearly be damaging and have an impact on the electorate and the presumption of innocence is only honoured in the breach by the media.

(b)The investigation has been a rush. The only inference NZ First can make is that the Director made a commitment to the media about the timing of the investigation indexed to the election. That is an irrelevant consideration and amounts to arbitrariness in the provision of information. The only relevant timing issue is the legal limitation period. Mr Pilditch would prefer to rely on affidavit evidence but needs to advance the application today. It is not satisfactory for a public officer to leave it to the morning of the day of issue of a press release to advise NZ First of the timing.

(c)Section 20 of the Serious Fraud Office Act 1990 prevents judicial review of decisions by the Director to investigate or take proceedings but not her decisions to make media statements, which are powers exercised in performance of her statutory functions. There is no statutory requirement to make public statements about the outcome of investigations and many regulatory authorities do not, though Mr Pilditch accepts it is the usual practice of the Director of the SFO. There is no pressing urgency on the Director to make the statement now.

(d)There is no prejudice to the Director if publication of the charging decision is delayed. There is a distinction between what is in the public interest and what the public finds interesting. There may be public interest in knowing what is happening with enforcement agencies’ investigations and in knowing what politicians are doing during an election campaign. But at their highest here, the charges are unproven

allegations against defendants who are presumed innocent, the merits of which will not be decided for many months. Against that, publication of the charging decision will be front page news, the constant focus of questions to the leader of NZ First and he will not be in a position to respond because the charges will be sub judice and he will be bound by SFO secrecy provisions.

(e)The prohibition on publication should ideally be until a new government is formed. Alternatively, it could be until the first appearance in Court of the defendants who are charged, on 29 October 2020. But, at the least, the prohibition should be until the election on 17 October 2020.

[21]              Mr Dixon QC, for the SFO, opposed any interim orders being granted, submitting:

(a)The decision to issue a statement is a consequential or implied power to make a public statement about the filing of charges which is a matter of public record. That is part of the ordinary practice of the Director, especially when there is public interest in an investigation and it is in the public arena, as this investigation is. In April, the Director responded to a media inquiry about whether the investigation would be completed before the election by saying, on the pre-COVID-19 timetable, the SFO expected it would be complete by the September election. As it happens, it was not complete before the first date set for the election. Usually the SFO is criticised for being too slow in its investigations but here, where it has been consistent with the intended timeframe, it is accused of moving too quickly.

(b)The SFO may be damned if it does make an announcement and damned if it does not. But it is inconsistent to argue that the SFO cannot take into account the pending election in the timing of the investigation but should have taken it into account in announcements about the filing of charges. There is a public interest in open justice, in seeing the

outcomes of investigations by the SFO and what charges are laid, especially where that concerns donations to a political party. Mr Pilditch says all that should be kept from the public for the benefit of NZ First in not being damaged by publicity. But that disregards the damage to the public interest by a lack of publicity and voters not being more informed by knowing that charges have been filed but not against candidates for public office. The publicity may even be helpful to NZ First in that respect.

(c)NZ First could potentially apply to the District Court for suppression of its identity as a connected person under s 202 of the Criminal Procedure Act 2011. But that would not enable suppression of the nature of the case against the defendants. That is a factor I should take into account in exercising my discretion.

(d)Even if the SFO were determined to file charges prior to the election and moved to complete the investigation more quickly than it ordinarily would in order to do so, there is nothing wrong with that as long as there is a proper basis for the charges. Mr Pilditch’s arguments seek to inhibit information about a matter of public record being before the public. Given the application is for the point at which a new government is formed, the natural corollary is that it would also keep the information from other political parties which may or may not want to form a government with NZ First if in a position to do so.

(e)Those who have not been charged may wish to make their own public statements. If the interim orders were granted and the SFO receives a media inquiry, as it will, it could not respond, which would inevitably cause the existence of the injunction to become known. Media reports to date have clearly distinguished between NZ First and the Foundation, so that concern is irrelevant. There is no parallel with the Comey/Clinton situation because Mr Comey announced he was re- opening an investigation, not that he was filing charges against people

with a connection to Mrs Clinton but not filing charges against Mrs Clinton.

Should the SFO’s public statement be prohibited?

[22]              Under s 15 of the Judicial Review Procedure Act 2016, the Court may make interim orders “if, in its opinion, it is necessary to do so to preserve the position of the applicant”. The Court has a wide discretion to consider all the circumstances of the case in deciding whether to grant interim relief.5 Making interim orders involves considering the seriousness of the question to be argued and the strength of the applicant’s case, the balance of convenience between the parties and the overall justice of the case.

[23]              I accept it is possible for a Court to judicially review the Director’s decision to issue a public statement about these charges. The SFO did not argue otherwise. The decision may not be explicitly provided for in statute, but it relates to the Director’s fulfilment of her statutory functions, is public in nature and has real world consequences. In Dunne v Canwest TVWorks Ltd, a decision about publicity which could influence voters’ decisions in an election campaign was held to be judicially reviewable.6 Similarly, I have no difficulty with the seriousness of the issues to be argued. I do not regard the potential parallel application to the District Court as particularly relevant.

[24]              Mr Pilditch referred to Morgan v Television New Zealand Ltd which was also decided in the context of the urgency of an election campaign.7 There, Venning J held that, where an application for interim relief will effectively determine the proceeding, the Court should take a more robust attitude to assessing the prospects of the applicant succeeding in the substantive proceeding.8 The interim relief sought here does not formally determine the foreshadowed application for judicial review. But the interim relief does appear to be a driving factor in the pursuit of substantive proceedings, so I treat the merits of the case relatively robustly.

5      Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423 (CA) at 430.

6      Dunne v CanWest TVWorks Ltd, above n 4.

7      Morgan v Television New Zealand [2017] NZHC 2178, [2017] NZAR 1485.

8      At [37], citing McKay Electrical (Whangarei) Ltd v Hinton [1996] 1 ERNZ 501 (CA) at 507;

Wilfred v Gan [2013] NZCA 457 at [21].

[25]              I do not consider NZ First’s case is particularly strong, on the basis of the evidence and information before me. As I observe below, there may be a sustainable argument that the SFO, as part of the politically neutral public service, must not be influenced by political considerations in its decisions, especially regarding criminal law enforcement. But there is no evidence before me that the Director’s decision was influenced by political considerations. And the Director’s statement on 21 April 2020 about the timetable for the investigation of the Foundation simply said that the SFO’s pre-lockdown timetable “would see us completing the investigation before the September election date” and they were then “on track to complete it within that timeframe”. The election was presumably mentioned in relation to the timeframe for the investigation because that was the subject of the media question to which the Director was responding. There is no evidence before me that the timeframe indicated by the Director was set because of the election, let alone because of political considerations. As it happens, the investigation was not completed by the September timeframe, but a week or so later.

[26]              I also have difficulty with the foreshadowed substantive ground of judicial review that the Director’s decision must take into account the impact of the announcement on the election. The political neutrality of the public service is an established constitutional convention in New Zealand, a fundamental feature of the public service reforms of 1912, explicitly recognised in the purpose of the State Sector Act 1988 in s 1A and is the first of five public service principles explicitly recognised by s 12 of the newly passed Public Service Act 2020. In the context of law enforcement, political neutrality seems likely to mean that a department must approach investigations into issues that are relevant to politicians in the same way as it approaches investigations into issues that are not. Both counsel accept the SFO has a usual practice of making public announcements about the outcomes of investigations. The SFO website suggests it is a very common practice. For the SFO not to adhere to that practice because the subject of the investigation is political, as NZ First’s foreshadowed ground of judicial review might suggest, could well be at odds with the principle of the political neutrality of the public service.

[27]              I accept there is a risk of confusion from the announcement. NZ First is currently engaged in an election campaign. Early voting starts in just over a week.

Election day is in just over three weeks’ time. The media articles before me indicate there is significant interest by the media and public commentators in the potential for criminal charges brought by the SFO in relation to the Foundation to impact negatively on NZ First’s electoral prospects. There is a risk of that. Against that is the possibility that a public statement by the SFO that it is not charging any Ministers, sitting MPs, candidates or their staff may assist NZ First’s electoral prospects. But there is little time in which to get that message through and, no doubt, explaining is often losing in politics.

[28]              However, I consider there is a significant public interest in the New Zealand voting public being informed during an election campaign about criminal charges of serious fraud against people or organisations related to political parties. The same applies to charges related to any political party, as NZ First argues in its correspondence with the SFO; though I am not aware of the intended timeframes for any other politically-related investigations by the SFO. The value of transparency weighs heavily against the Court interfering with the decision of the Director of the SFO to make the public announcement at issue here. The proposed statement is brief and factual. The Director is accountable for the decision to issue it, including via the foreshadowed substantive judicial review proceeding. But that does not require interim orders by the Court; particularly interim orders that would conceal a politically relevant fact from the public during an election campaign, let alone from potential coalition partners during the formation of government.

[29]              This factor is reinforced by the right of everyone to freedom of expression, including the freedom to receive information of any kind in any form, under s 14 of the New Zealand Bill of Rights Act 1990. Under s 5, that is only subject to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society. Based on the considerations above, I do not consider the proposed interim orders are a reasonable limit on the freedom of the New Zealand public to receive information that can be demonstrably justified in a free and democratic society.

[30]              Ultimately, I consider the public interest in transparency outweighs the inconvenience of the announcement to NZ First. I do not consider the Court is justified in inhibiting the value of that transparency for the New Zealand public.  It will be up

to the political system including the media, rather than the judicial system, to ensure the transparency of the announcement is not obscured by confusion and misinformation.

Result

[31]              I decline the application for interim orders. Costs of the application will lie where they fall, given the urgency with which the application was dealt with by all parties and the seriousness of the interests at stake.

[32]              Mr Pilditch indicated, if the decision went against NZ First, he would need time to consider the decision and get instructions, including about whether to continue to seek suppression of the application and, I infer, whether to appeal. For that purpose, he requested that the existence of the application be suppressed for a few days after my judgment. Otherwise, the right to appeal would be rendered nugatory. Mr Dixon agreed that suppression of the existence of the application should lapse within 48 hours to allow Mr Pilditch to obtain instructions. But that period would fall over the weekend.

[33]              I accept suppression of the application and this judgment for a brief period is warranted in order to allow NZ First to consider the judgment and its position. But the urgency and significance of the issues, the conclusion I have reached, and the interests of NZ First and the public in allowing as much time as possible for clarification of the situation before the election, suggest a slightly faster timetable than counsel proposed. I make an interim order suppressing this judgment, the application and all matters relating to it, which lapses at 5 pm Friday 25 September 2020 unless the Court otherwise orders.

Palmer J