Peters v Director, Serious Fraud Office
[2022] NZHC 2063
•19 August 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-132
[2022] NZHC 2063
IN THE MATTER OF an originating application for declaratory relief and/or orders under the Court’s
inherent jurisdiction
BETWEEN
CHRISTOPHER ANTHONY PETERS
Applicant
AND
DIRECTOR, SERIOUS FRAUD OFFICE
Respondent
Hearing: 9 August 2022 Appearances:
C A Peters (Self-represented Applicant) in person D Johnstone and DPJ Luo for Respondent
Judgment:
19 August 2022
JUDGMENT OF GORDON J
This judgment was delivered by me
on 19 August 2022 at 12 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors/Counsel:
D Johnstone, Barrister, Auckland Serious Fraud Office, Auckland
Copy to: C A Peters
PETERS v DIRECTOR, SERIOUS FRAUD OFFICE [2022] NZHC 2063 [19 August 2022]
[1] The applicant, Christopher Peters, and the respondent, the Director of the Serious Fraud Office (the Director), seek orders and directions in relation to an independent review, for privilege, of documents seized under warrant from Mr Peters and his family members by the Serious Fraud Office (SFO) on 12 May 2021.
[2] The purpose of the hearing was to address the scope of the independent review and in particular two areas of disagreement between Mr Peters and the Director: the categories of privilege which may be claimed in the seized material and the allocation of costs for the independent review. There is also disagreement over what the Director says is the blanket way in which Mr Peters has claimed privilege and the search terms he proposes to be used to identify privileged documents.
[3] At the commencement of the hearing, Mr Peters made an oral application for name suppression. I refused the application. My reasons are given later in this judgment.
Background
[4] In May 2021, the Director applied for three search warrants pursuant to s 10 of the Serious Fraud Office Act 1990 (the SFO Act) in relation to three addresses associated with the Peters family. They were issued on 11 May 2021 by Judge Sharp and executed on 12 May 2021. There is no issue before the Court regarding the issuing of the search warrants and their execution.
[5] At the time, Mr Peters and one of his brothers, Robert Peters, were living at one of the addresses. His mother, Serene Peters, was living at the second address. The third address was a storage unit at a storage facility. Approximately 93 electronic devices consisting of computers, hard-drives, USB sticks and mobile devices were seized from the three addresses, together with hard copy documents.
[6] Mr Peters’ submissions were in relation to devices and documents seized from all three addresses.
[7] On 14 May 2021, the Director confirmed that an investigation identified as “Gerard Peters & others” was ongoing. Gerard Peters is one of Mr Peters’ brothers.
The search warrants
[8] A search warrant under s 10 of the SFO Act must be issued by a Judge.1 A warrant under the SFO Act is subject to such reasonable conditions as the issuer may specify in the warrant.2 The warrants contain conditions in relation to a claim of “legal professional privilege” (privilege)3 in respect of material seized. There are separate conditions for hard copy material and electronic material. In essence the process for both hard copy and electronic material includes the following:
(a)An affected person must make any claim of privilege in writing to the SFO within seven days of execution of the warrant;
(b)The claim is to specify individual documents and the specific ground of claim of privilege for each document;
(c)If the SFO does not accept the claim the parties shall attempt to reach agreement;
(d)If no agreement is reached the parties shall appoint an independent barrister to review the documents over which privilege is claimed; and
(e)If no agreement is reached on the appointment of an independent barrister or the instructions for the independent barrister, the claimant is to file proceedings.
Proceedings filed
[9] Mr Peters filed an originating application on 28 January 2022 seeking the return of documents seized under the warrants, and asking the Court to determine the privilege claims if no agreement was reached. The application was first called in this Court on 16 March 2022. Mr Peters was given leave to commence his application by way of originating application. Timetable orders were made by consent. One of those
1 Serious Fraud Act 1990, s 10(2).
2 Serious Fraud Act, s 12(3).
3 I will use the word “privilege” just in this paragraph. I will otherwise refer to it in full as “legal professional privilege” to distinguish it from other forms of privilege.
orders was that Mr Peters was to have access to the seized material and provide any further particulars of the privilege claims by a certain date. Mr Peters has now had access to the seized material. He has subsequently provided the Director with a schedule of documents which he claims are privileged. However, there is an issue over what the Director says is a lack of particularisation of his claims in relation to the seized documents and the extent and generality of the keywords he proposes for the searching of documents.
[10] Additionally, on 16 March 2022 the parties were directed to agree on the appointment of an independent barrister (reviewer) to review the documents over which privilege is claimed or agree on a mechanism for such appointment (such as by the Auckland Branch President of the New Zealand Law Society) by 27 April 2022.
[11] The parties were not able to agree on the appointment of a reviewer. Accordingly, they accepted that the appointment should be made by the Auckland Branch President of the New Zealand Law Society (NZLS).
[12] However, the parties were unable to agree on the scope of the independent review, including the instructions to be given to the reviewer regarding the categories of privilege which Mr Peters is entitled to claim. Consequently, the NZLS has advised the Director that the appointment cannot be made at this stage. The NZLS requires the parties to properly define the scope of the review and submit a short list of possible reviewers from which the NZLS will make the selection.
Privilege
Applicant’s submissions
[13] Mr Peters submits that the privileges in ss 53-60 of the Evidence Act 2006 and s 136 of the Search and Surveillance Act 2012 apply. Those privileges are, first under the Evidence Act, as follows:
53 Explains the effect and protection of privilege
54 Privilege for communications with legal advisers
55 Privilege and solicitors’ trust accounts
56 Privilege for preparatory materials for proceedings
57 Privilege for settlement negotiations, mediation, or plea discussions
58 Privilege for communications with ministers of religion
59 Privilege in criminal proceedings for information obtained by medical practitioners and clinical psychologists
60 Privilege against self-incrimination
[14] Having identified s 60 as one of the privileges that applies, Mr Peters accepts that s 27 of the SFO Act provides that privilege against self-incrimination does not excuse a person from producing a document.
[15] Section 136 of the Search and Surveillance Act 2012 provides that the privileges listed in that section are recognised for the purposes of Subpart 5, (Privilege and confidentiality), of Part 4 (General provisions in relation to search, surveillance, and inspection powers : ss 89–181):
136 Recognition of privilege
(1) The following privileges are recognised for the purposes of this subpart:
(a)legal professional privilege, to the extent that (under section 53(5) of the Evidence Act 2006) it forms part of the general law:
(b)privilege for communications with legal advisers (as described in section 54 of the Evidence Act 2006):
(c)privilege for preparatory materials for proceedings (as described in section 56 of the Evidence Act 2006):
(d)privilege for settlement negotiations or mediation (as described in section 57 of the Evidence Act 2006):
(e)privilege for communications with ministers of religion (as described in section 58 of the Evidence Act 2006):
(f)privilege in criminal proceedings for information obtained by medical practitioners and clinical psychologists (as described in section 59 of the Evidence Act 2006):
(g)to the extent provided in section 138, and only to that extent, any privilege against self-incrimination (as described in section 60 of the Evidence Act 2006):
(h)privilege for informers (as described in section 64 of the Evidence Act 2006):
(i)the rights conferred on a journalist under section 68 of the Evidence Act 2006 to protect certain sources.
…
[16] Mr Peters submits there is no explicit wording or clear language in the SFO Act to exclude compliance with the Evidence Act and the Search and Surveillance Act, except where the privilege of self-incrimination may not apply under s 27 of the SFO Act.
[17] Mr Peters relies on the New Zealand Bill of Rights Act 1990 (NZBORA), and his general rights under this legislation. He does not refer to a particular provision in the NZBORA, or a particular right or freedom which he alleges the Director has breached. Rather, he submits that the Director is effectively abrogating his rights under the NZBORA and is interpreting her powers too broadly.
[18] Mr Peters also refers to the Public Service Act 2020 and a document by the Public Service Commission on minimum standards for information gathering by government agencies.4 This document states that agencies must comply with the NZBORA, the Search and Surveillance Act and the Privacy Act 1993 as well as agency-specific legislation and relevant decisions of the courts. Mr Peters argues that the Director must therefore comply with s 136 of the Search and Surveillance Act.
[19] In making his submissions, Mr Peters does not address the application of any of the particular privileges to his circumstances or documents. His submission is a global one directed at all the privileges he says are available to him under the Evidence Act and Search and Surveillance Act.
Respondent’s submissions
[20] The Director’s position is that solicitor/client privilege and litigation privilege (for extant matters) are the only categories of privilege that may be claimed. Mr Johnstone for the Director submits that the definitions in the Evidence Act are a useful guide to the privileges the Director accepts can be claimed:
4 State Services Commission Acting in the Spirit of Service: Information Gathering and Public Trust
(18 December 2018).
(a)Legal advice privilege: a privilege for communications between a person and their legal adviser, applying to communications intended to be confidential and made in the course of and for the purpose of the person requesting or obtaining professional legal services from the legal adviser or the legal adviser giving such services to the person.5
(b)Litigation privilege: a privilege for preparatory materials for proceedings, applying to a communication or information only if the communication or information is made, received, compiled or prepared for the dominant purpose of preparing for a proceeding or an apprehended proceeding.6
Discussion
Serious Fraud Office Act 1990
[21] The SFO Act provides for a specialist office to investigate and prosecute serious and complex fraud. The Act empowers the Director accordingly. Before seeking a search warrant the Director will have decided that the case being investigated meets the threshold for exercising powers under Part 2 of the Act:
7 Exercise of powers under this Part
Where the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed, the Director may exercise any power conferred by this Part.
[22]In Hawkins v Sturt this Court discussed the general purpose of the SFO Act:7
The general purpose of the Act as stated in the long title is to facilitate the detection and investigation by the Serious Fraud Office of cases of serious or complex fraud, and to enable proceedings relating to such fraud to be taken expeditiously. It is in accordance with that general purpose that the Act contains provisions that derogate from common law and statutory rights and privileges. It is apparent that the legislature, in enacting these provisions, considers that the problems associated with proving charges of serious and complex fraud are such that, in the public interest of obtaining convictions of persons guilty of such frauds, certain common law and statutory protections
5 Evidence Act 2006, s 54.
6 Evidence Act, s 56.
7 Hawkins v Sturt [1992] 3 NZLR 602, at 604.
should no longer apply. The Act is to be interpreted in a way that accords with that statutory purpose or objective.
[23] In SFO v Mamfredos8 Courtney J referred to the way in which the purpose of the SFO Act is divided into parts in the long title, namely:
(a) To facilitate the detection and investigation by the Serious Fraud Office of cases of serious or complex fraud; and
(b) To enable proceedings relating to such fraud to be taken expeditiously; and
(c) To provide for matters incidental upon the establishment of the Serious Fraud Office.
[24] Courtney J noted that it is clear from the stated purpose that there is a clear distinction between the investigation into fraud and proceedings taken in respect of such fraud.9 I agree with that observation. The distinction is important in this case. No charges have been laid. Matters are still at the investigatory stage. This will be relevant when I come to consider Mr Peters’ claims under the Evidence Act.
Legal advice and litigation privilege under the SFO Act
[25] As Mr Johnstone notes, legal advice privilege and litigation privilege as established by the common law10 receive only limited reference under the SFO Act. These privileges are described in broad terms as “legal professional privilege”, in s 24, which sets out a procedure for a District Court Judge to resolve claims for privilege when documents are sought from legal practitioners.
[26] However, in Beecroft v District Court at Auckland11 this Court held that s 24 merely “indicates that the legislature recognised that legal professional privilege should remain in existence within the context of Serious Fraud Office investigations”, rather than operating as a code for such claims.12 That case was a judicial review of a decision of a District Court Judge who had held that certain documents obtained by
8 SFO v Mamfredos HC Auckland CIV-2005-404-5971, 13 April 2006.
9 At [12].
10 Broadcasting Corporation of New Zealand v Wilson & Horton [1991] 1 NZLR 335 (HC) at 341;
Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 (CA).
11 Beecroft v District Court at Auckland [1999] 3 NZLR 672 (HC).
12 At 679.
the SFO pursuant to s 9 of the SFO Act did not attract legal professional privilege as defined in s 24 of the SFO Act.
[27] In Beecroft, the SFO had obtained possession of the applicant’s laptop computer which contained the documents in question. The District Court Judge had held in relation to each of the documents, because these had not passed to the legal professional, they could not attract privilege.
[28] On review Laurenson J referred to s 23 of the SFO Act which removes the rights of third parties to claim confidentiality on behalf of a client or customer. Laurenson J considered that having imposed a blanket withdrawal of privilege in respect of communications with any third party in s 23, the legislature then recognised that legal advisers were included amongst those third parties. Noting the opening words of s 24, Laurenson J considered that the legislature had determined that the blanket provisions of s 23 should not apply to legal advisers.13 Laurenson J considered that the legislature could not have intended to remove such privilege from a person being investigated and/or prosecuted but at the same time reaffirm the privilege in communications procurable from the person’s legal adviser.14
[29] The Judge then turned to consider whether the full range of legal professional privilege, including litigation privilege, is recognised in the SFO Act.15
[30] The Judge concluded that the mere existence of s 24 by itself implies that the full extent of legal professional privilege remains extant. That is, s 24 is an express preservation of legal professional privilege to make it clear that in relation to the purposes and powers vested in the Director of the SFO, the privilege is not abrogated.16 The Judge concluded that “the protections afforded by the full range of legal professional privilege remain open to any citizen who is the subject of prosecution by, or sensibly considers he or she is likely to be prosecuted by, the Serious Fraud Office”.17
13 At 678.
14 At 679.
15 At 683.
16 At 687.
17 At 687.
[31] The Director takes no issue with the decision in Beecroft. Mr Johnstone points to the fact that the search warrants in this case were drafted on the express basis of giving effect to legal professional privilege.
[32] However, Mr Johnstone submits that no other privilege has survived the introduction of the SFO Act, and that no other common law privileges may be claimed against the Director undertaking an investigation (as opposed to pursuing proceedings upon an investigation).
[33] Mr Johnstone notes that first, while the SFO Act does not specifically have a section to outline its purpose, when introducing the Bill to Parliament in 1989, Hon WP Jeffries commented:18
Fraud can lurk behind apparently normal complex commercial transactions. It is committed and carefully hidden with stealth and deceit. Traditional investigatory powers are insufficient. Investigators need special powers to be able to unravel the complex transactions and documentation that accompany such offences.
[34] Second, he submits that as recognised in Beecroft, subject to the general preservation of legal professional privilege by implication arising from s 24, s 27 (“privilege against self-incrimination no excuse”) overcomes any remaining confidence in evidential material.
[35] As I understand that submission, Mr Johnstone essentially says that unlike legal professional privilege which is carved out or preserved by s 24, no other privilege is expressly carved out or preserved. When that is set against the context of the Director’s special powers under the SFO Act, that is an indication that no other privilege is available under the SFO Act.
[36] In the absence of more detailed argument I am not prepared to decide that is the case in relation to all of the Director’s powers, and it is not necessary for me to do so, for two reasons.
18 (5 December 1989) 503 NZPD 140222.
[37] First, although Mr Peters has argued that all the privileges in the sections he identifies in the Evidence Act and Search and Surveillance Act are available to him, in fact the only privileges he actually claims in relation to the seized documents are legal professional privilege and litigation privilege. In his schedule sent to the Director setting out his privilege claims, the claims all fall within either legal professional privilege or litigation privilege. Therefore, his argument that all categories of privilege identified by the Evidence Act and Search and Surveillance Act are available to him is of academic interest only.
[38] The second reason is that this Court is only concerned with privilege claims in a narrow context, that is in relation to documents seized under a warrant issued under s 10 of the SFO Act.
[39] For completeness, although not strictly necessary, (given the only privilege Mr Peters is in fact claiming is legal professional privilege including litigation privilege) I discuss the Evidence Act and Search and Surveillance Act below. In short, neither Act provides a basis for the broad range of privileges Mr Peters submits are available to him.
Evidence Act 2006
[40]Section 53 specifically refers to disclosure in a proceeding:
53 Effect and protection of privilege
(1) A person who has a privilege conferred by any of sections 54 to 59 in respect of a communication or any information has the right to refuse to disclose in a proceeding—
(a)the communication; and
(b)the information, including any information contained in the communication; and
(c)any opinion formed by a person that is based on the communication or information.
(2) A person who has a privilege conferred by section 60 or 64 in respect of information has the right to refuse to disclose in a proceeding the information.
(3) A person who has a privilege conferred by any of sections 54 to 59 and 64 in respect of a communication, information, opinion, or document may require that the communication, information, opinion, or document not be disclosed in a proceeding—
(a)by the person to whom the communication is made or the information is given, or by whom the opinion is given or the information or document is prepared or compiled; or
(b)by any other person who has come into possession of it with the authority of the person who has the privilege, in confidence and for purposes related to the circumstances that have given rise to the privilege.
(4) If a communication, information, opinion, or document, in respect of which a person has a privilege conferred by any of sections 54 to 59 and 64, is in the possession of a person other than a person referred to in subsection (3), a Judge may, on the Judge’s own initiative or on the application of the person who has the privilege, order that the communication, information, opinion, or document not be disclosed in a proceeding.
...
[41]“Proceeding” is defined in s 4 of the Evidence Act as follows:
(a) a proceeding conducted by a court; and
(b) any interlocutory or other application to a court connected with that proceeding
[42] However, legal professional privilege (the availability of which is not in dispute) is addressed in s 53(5) as follows:
(5) This Act does not affect the general law governing legal professional privilege, so far as it applies to the determination of claims to that privilege that are made neither in the course of, nor for the purpose of, a proceeding.
[43] On a simple plain language interpretation, an investigation by the Director prior to charges being laid is not a “proceeding” as it is defined in the Evidence Act.
[44] This Court reached that conclusion in Mamfredos, under the predecessor to the current Evidence Act. The reasoning, with which I agree, still applies.
[45] The defendant in that case was the wife of George Mamfredos, who was the subject of a SFO investigation under Part II of the SFO Act. The Director issued a
notice to Mrs Mamfredos requiring her to attend an interview before him. She refused, invoking medical grounds and spousal privilege. In relation to the latter the Director applied for a declaration to the effect that spousal privilege, if invoked in an investigation by the Director in which the spouse of a person whose affairs were being inquired into but had not been charged with an offence, does not amount to a lawful excuse or justification in terms of s 45(d) of the SFO Act.
[46] Mrs Mamfredos relied on s 29 of the Evidence Amendment Act (No. 2) 1980 as lawful justification or excuse for refusing to attend an interview with the Director. That section provided that a wife is not compellable “in any proceeding” to disclose any communication made to her by her husband during the marriage.
[47] The issue before the Court was whether a s 9 Notice constituted a proceeding for the purposes of s 29. Courtney J referred to s 2 of the Evidence Act 1908, which defined “proceeding” as:
Includes any action, trial, inquiry, cause or matter, whether civil or criminal, depending or to be inquired or determined in any court.
[48] Courtney J referred to and agreed with the following statement by Williams J in R v Pullvoorder:19
The definition of “proceeding” is an inclusive one, naming trial as one of the ways in which a proceeding may be conducted but it clearly includes any form of proceeding once such is “depending or to be inquired of or determined in any court”.
[49] Courtney J stated that the determinative fact in whether there is a proceeding in existence is whether a court is seized of the matter.20 It was argued on behalf of Mrs Mamfredos that under s 9 the Director has authority to hear, receive and examine evidence and was therefore acting judicially when issuing a s 9 Notice. Consequently it was said for Mrs Mamfredos an interview conducted under s 9 was a “proceeding” as defined in the Evidence Amendment Act. The Judge in rejecting those submissions said:
19 SFO v Mamfredos, above n 8, at [8], citing R v Pullvoorder HC Auckland T213/97, 4 February 1998.
20 At [9].
[12] It is clear from the stated purpose of the Act that there is a clear distinction between the investigation into fraud and proceedings taken in respect of such fraud. The Director’s role is to investigate and gather evidence. He has the power required to fulfil that role by interviewing relevant persons and obtaining documents. But he has no power to require evidence to be taken under oath and no powers of determination.
[13] In relation to proceedings, the stated purpose of the Act is to enable them to be taken expeditiously. The underlying premise is that the Director’s investigations will lead to proceedings, rather than constitute proceedings. It would be contrary to this purpose to regard any act by the Director under s 9 as a proceeding in itself.
[50] In conclusion, for the above reasons, apart from legal professional privilege encompassing litigation privilege, none of the other privileges in the Evidence Act are effective against the Director in executing a search warrant under s 10 of the SFO Act.
Search and Surveillance Act 2012
[51] The Search and Surveillance Act codifies and consolidates various aspects of the law relating to search, seizure, surveillance and production. By contrast with the SFO Act the Search and Surveillance Act makes express provision in s 136 to protect a range of privileged materials, under Subpart 5 (Privilege and confidentiality) of Part 4.
[52] As Mr Johnstone submits, the Search and Surveillance Act is clear that it does not affect the Director in the exercise of her powers or the scope of SFO Act warrants. First, Part 4, which includes s 136 upon which Mr Peters relies, relates to warrants issued under the Search and Surveillance Act. Section 89 provides in relevant part:
89 Application of this Part
(1) This Part, so far as applicable and subject to any contrary provisions, applies in respect of matters provided in Parts 2 and 3, in respect of each of the following:
(a)…
(b)search warrants and examination orders applied for, issued, or made under Part 2:
…
[53] The warrants in this case were issued under s 10 of the SFO Act, not under Part 2 of the Search and Surveillance Act.
[54] Second, s 89 sets out the manner and extent to which general provisions of the Search and Surveillance Act (including those concerning privilege) apply to other enactments being those listed in the Schedule to the Search and Surveillance Act. This list does not include the SFO Act.
[55] In conclusion, for the above reasons, the privileges as set out in s 136 of the Search and Surveillance Act (apart from legal professional privilege encompassing litigation privilege) are not effective against the Director in executing a search warrant under s 10 of the SFO Act.
Conclusion on privileges that may be claimed by Mr Peters
[56] Mr Peters cannot rely on the privileges he refers to in the Evidence Act or Search and Surveillance Act when claiming privilege in documents seized under warrants issued under s 10 of the SFO Act. As agreed by the Director, Mr Peters may claim legal professional privilege and litigation privilege as provided for by s 24 of the SFO Act. On the facts, those are the only categories of privilege which Mr Peters has actually claimed.
Methodology
[57] The second issue for deciding is the scope of the independent review. That involves a consideration of the proper methodology for undertaking a privilege review within the available categories, namely legal professional privilege and litigation privilege.
[58] Mr Peters has claimed privilege in two ways. First, there is what the Director has called the “folder claims”. I will adopt that term. This is a claim for privilege in respect of entire electronic folders, documents and software applications largely on the basis that the material has been “compiled for legal preparatory materials for legal proceedings” or “compiled for lawyer”. Second, Mr Peters claims privilege in respect of documents to be identified by a key word search.
Folder claims
[59] On 6 August 2021 Mr Peters claimed privilege over a range of electronic material identified as folders, documents, entire devices (USB), and software applications such as WhatsApp and Notes.
[60] The Director’s position is that the claims are made at an extremely generic level. Legal privilege appears to have been claimed on the basis of compiling historic documents into bundles and then making an assertion that the bundle in its entirety attracts legal professional privilege.
[61] Mr Johnstone submits that privilege cannot be claimed simply on the basis of the compilation of electronic materials. Mr Johnstone further submits that the question of whether privilege attaches should be determined on a document-by-document basis, in light of the circumstances in and purpose for which the document was created.
[62] It appears that the majority of the folder claims relate to litigation privilege. It is well settled that litigation privilege will only protect communications where the communication is for the dominant purpose of permitting the lawyer to prepare for existing or reasonably anticipated litigation.21 Accordingly, litigation privilege requires that litigation was reasonably apprehended at the date the document (or information) was prepared. These are questions of fact, but there must be a “real likelihood” of litigation.
[63] It is clear from the warrants themselves that they require particularisation of privilege claims. Clause 7 which relates to hard copy material and cl 11 relating to electronic material in the warrants refer to claimants:
(cl 7) … specifying by description the individual document in respect of which the claim is made and the specific grounds of the claim of privilege for each document.
(cl 11) … specify[ing] by description the particular material over which the claim is made and the specific grounds of the claim of privilege for each document.
21 Financial Markets Authority v Hotchin [2014] NZHC 2732 at [46], citing United States of America v Philip Morris Inc (No 1) [2004] EWCA Civ 330, [2004] 1 CLC 811 at [46].
[64] The only information Mr Peters has provided to the Director is the electronic device number, name of file, location (or device) and a generic ground of privilege which usually relates to the compilation of documents.
[65] Mr Johnstone submits that while the Search and Surveillance Act privileges do not apply, procedures in that Act for claiming privilege provide useful guidance. Under s 147 of the Search and Surveillance Act a person cannot make a blanket claim of legal privilege for things that are seized or sought to be seized. Mr Johnstone submits the folder claims are tantamount to a blanket claim.
[66] An affidavit of Jung Bum Son, the principal electronic forensic investigator at the SFO, provides support for the position adopted by the Director in relation to the folder claims. Mr Son says locking down entire electronic folders, devices and software applications for legal privilege is problematic from an investigation point of view. He says a forensic examination of a computer and mobile device is needed to check for other file variations, which may be erased, hidden, encrypted, compressed, or password protected. He says isolating the entire folder and applications such as WhatsApp and Notes is not practical as this will introduce a high risk of missing material which is potentially relevant to the investigation. Mr Son continues:
5.6 Instant messaging applications for example, can be used to send a variety of communications including text messages, photographs, sound recordings, documents and video. They can also be used to make voice and video calls. This high volume of the contents and the potential intentional concealment of user activity through random ordering and deceptive files names requires an examiner to manually examine the stored data to avoid losing potential relevant material.
5.7 In addition of calls and messages involving data and Wifi usage, modern cell phones often record location information as part of the application usage and day to day function. This type of information is not available if the chat messages are excluded from the examination which they would be if the privilege request by the Peters was followed through with.
5.8 On the face of it there appears to be approximately 15,000 or more electronic files within the folder claim. However, that is not accurate without exploring the folder structures as certain applications record their data in different ways. For example, WhatsApp may record '1' as a chat thread instead of message and therefore there could be hundreds of chat messages but only reflected as 1 file.
5.9 I believe the best way to protect the Peters privilege interests and the investigations interest is by way of specific keyword searching instead of
locking down entire electronic folders, electronic devices and software applications as sought by the Peters.
[67] I accept that without sufficient particularity the material cannot be sequestered appropriately nor can the Director make an informed decision about whether to dispute the privilege status of the seized material. And as already mentioned, the conditions in the warrants require specificity.
[68] In discussing this issue with Mr Peters at the hearing, the Court expressed the view that he would need to identify particular documents for which privilege is claimed with details including: the date on which the document was created, a general description of the document, and the particular privilege claimed. Mr Peters accepted he could do that but indicated there might be an issue with identifying the date of creation of documents which had been scanned. However, that issue may well be overcome with key word searches for privileged material which I address in the next section of this judgment.
[69] Given that the documents themselves were not before the Court I do not make an order formally disallowing the folder claims. But I make a direction that Mr Peters must particularise his claims in the manner required by the warrants and referred to in
[68] above. He must do so within six weeks of the date of this judgment (six weeks was the time suggested by Mr Peters at the hearing).
Key word claims/searches
[70] The purpose of searching using key words is to create a pool of documents that can then be reviewed by the person claiming privilege to confirm privilege and/or be provided to independent counsel for review. Mr Son says that in his experience key words are a blunt tool and as a result require careful consideration prior to running them across a case. He says key words which are not carefully constructed and are general in nature will often cause a large responsive set which is unhelpful to both the privilege claimant and the SFO.
[71] On 6 August 2021 Mr Peters provided, along with the folder claims, a number of key words, in excess of 150, for use in searches. Then on 20 September 2021 a
further communication from Mr Peters updated the list and colour coded them. Given my decision as to the categories of privilege that may be claimed this leaves 67 key words which Mr Peters coded red.
[72] However, as Mr Son says, a number of the “red” key words are very generic in nature. For example the following were some of the words included: affidavit, defense, defence, legal brief, law, lawyer, trustee, beneficiary, barrister, and legal. In another affidavit filed on behalf of the Director, Tineka Abe, a designated member of the SFO states that such general terms tend to capture information beyond the intended application of the privilege protocol and for that reason the SFO does not use them to sequester information.
[73] The Court was advised that a search conducted by the SFO using all 67 terms coded “red” by Mr Peters resulted in around 54,000 documents being identified, together with around 500,000 “family documents” which are those either attached to or referenced in the 54,000 documents.
[74] Removing generic legal terms from Mr Peters’ “red” list leaves approximately 50 names which are a combination of first names, surnames, and names of law firms. The Director says that narrowing this further by using the full names of lawyers or firms and domain names creates a realistic set (being a total of 24 key words). Mr Son says this list would be the standard key words the SFO would typically receive from parties claiming legal privilege wanting key words run across the material in order to locate their likely privileged documents.
[75] A search using these 24 key words returned a total result of 4,210 documents. On 7 September 2021 the Director proposed to Mr Peters that a similar list be used but no agreement was reached.
[76] I accept that using all the “red” key words in Mr Peters’ list is likely to produce a large amount of material which is not only not privileged but also irrelevant to both parties. In a different context, in Assa Abloy New Zealand Ltd v Allegion where the
Court was considering civil discovery, this Court held that a party could not reasonably be required:22
… to embark on a search that is likely to be hopeless and a waste of time and money.
[77] Without further information the Court is not able to direct that the key words proposed by the Director are used as search terms, and indeed the Court was not asked to do so. But the Court can go so far as to indicate that the use of generic key words is likely to produce a large number of irrelevant documents which will make the review process unworkable and that Mr Peters and the Director should be able to agree on a list of key words of a kind that the Director had previously proposed to Mr Peters and which was before the Court. Any additional words Mr Peters considers should be added should be discussed with the reviewer and added if considered appropriate by the reviewer.
Terms of the independent review
Draft instructions
[78] Included in the materials filed by the Director for the hearing was a document containing draft joint instructions for the reviewer. The draft instructions essentially provide for three stages of review:
(a)In the first stage the parties will work with the reviewer to finalise the list of search terms so as to enable a set of documents to be produced for the reviewer to review for privilege;
(b)In the second stage the reviewer will undertake the substantive privilege review;
(c)Stage three provides for further review at a later date should further information available to the Director indicate that potentially privileged documents will be relevant to the investigation.
22 Assa Abloy New Zealand Ltd v Allegion [2015] NZHC 2760, [2018] NZAR 600 at [10].
[79] Mr Peters did not indicate any disagreement with the draft instructions. They appear generally appropriate.
[80] The timeframe for the first stage which the parties considered was achievable is six weeks from the date of this judgment. In order to meet that goal Mr Johnstone suggested that by the end of the first two weeks of that period the parties would need to reach agreement on the identity of the reviewer and the terms of instructions to the reviewer.
[81] As to the former, the Director has now made a list of four possible candidates (law firms) with the technical capability to carry out the review and which have not identified any possible conflict of interest. As a matter of priority Mr Peters and the Director should attempt to reach agreement on a reviewer. If that is not possible then I direct that within one week of the date of this judgment the Director is to send a copy of her list of four candidates to the Auckland Branch President of the NZLS for the President to make the selection. That will give the President a week to make the selection so as to meet the goal of identifying the reviewer within two weeks of the date of this judgment.
[82] Also as a matter of priority the Director and Mr Peters should work together to endeavour to agree on the draft instructions to be provided to the reviewer. It should be possible for this step to be completed within the two week period suggested by Mr Johnstone.
[83] Then, still within the initial six-week period, the parties are to endeavour to reach agreement over the key words to be used as search terms. This exercise should be carried out in conjunction with the reviewer if necessary.
[84] Also, as earlier directed, within the six-week period after the date of this judgment Mr Peters is to particularise his claims for privilege by reference to individual documents.
[85] All of that should result in a set of documents being created for the reviewer within six weeks of the date of this judgment.
[86] I reserve leave to both parties to come back to the Court if there are any issues in completing the preliminary steps in stage one within two weeks of the date of this judgment and the other steps in stage one within six weeks of the date of this judgment. I have made a formal direction only in respect of Mr Peters particularising his privilege claims for individual documents as set out in [68] above and the Director sending the short list of possible reviewers to the President of the NZLS within one week if agreement is not reached (at [81]). Otherwise I leave the parties to work together and with the reviewer to meet the timeframes referred to above.
Cost of independent review
[87] The parties have failed to reach agreement on who is to bear the cost of the independent review.
[88] At this stage the Court is concerned only with the cost of stage one. Mr Johnstone suggests that the parties may be able to agree on costs for stages two and three. Mr Peters says that Director should meet the entirety of the cost. In statements addressed to the Director, Mr Peters argues that:
Claiming privilege is our right and we do not believe that costs and financial hardship should allow us to forfeit our rights to an independent review of the privilege claim.
The independent review is part of your investigative process, and we believe this cost must be met by your office.
[89]Mr Peters accordingly seeks an order or direction that:
... the respondent meet the reasonable costs and expenses of the independent practitioner, including the cost of such technical assistance and/or resource as he/she might reasonably require.
[90] The Director’s position is that the cost should be shared on a 50/50 basis. Mr Johnstone submits that, while claiming privilege is indeed a right, or at least entitlement, it must be claimed responsibly and within appropriate bounds.
[91] Mr Johnstone further submits that sharing the cost equally would provide Mr Peters with an appropriate incentive to ensure privilege claims are made responsibly. He refers to the broad and generalised approach to privilege which
Mr Peters has adopted to date. In these circumstances, he submits it would not be conducive to justice for the Director to be required to meet the entire burden of the cost of review for stage one.
[92] The cost of the independent review, insofar as it is covered by the Director, draws on the public purse. While a claim of legal privilege is a type of right, it is also, in this case, a matter of personal interest. A balance is required between protecting individual rights and upholding the public interest in a cost-effective and timely investigation.
[93] On this basis I find the suggestion of a 50/50 division of costs for stage one of the review is appropriate. I direct accordingly.
Summary of result
[94] Mr Peters cannot rely on the privileges he refers to in the Evidence Act or Search and Surveillance Act when claiming privilege in documents seized under warrants issued under s 10 of the SFO Act. As agreed by the Director, Mr Peters may claim legal professional privilege and litigation privilege as provided for by s 24 of the SFO Act. On the facts, those are the only categories of privilege which Mr Peters has actually claimed.
[95] Both parties have leave to come back to the Court if there are issues in progressing stage one of the process for the independent review and/or completing stage one within the six-week period that the parties accepted was appropriate and achievable for that stage. In particular, the Director has leave to come back to the Court if Mr Peters fails to comply with the direction in [68] regarding particularising his privilege claims.
[96]The cost of stage one of the review is to be borne 50/50 by the parties.
[97] The parties also have leave to come back to the Court if they are not able to agree on how the cost of stage two and stage three of the independent review should be apportioned.
Name suppression
[98] As noted in [3] above I refused Mr Peters’ oral application for name suppression.
[99] Mr Peters submitted that the publication of his name would prejudice his ability to obtain employment in the future. No evidence was offered in support of that submission. He accepted that he had not been charged with an offence but he referred to the “optics”. Mr Peters accepted that there had already been media reports in which he was named (along with his brother Gerard Peters); one of these reports refers to a Serious Fraud Office investigation which “rumbles on”. Mr Peters also said that the media reports contained false information.
[100] It is first important to note the principle of open justice. In the context of criminal cases, s 196(1) of the Criminal Procedure Act 2011 provides that (subject to certain exceptions) every hearing is open to the public. Section 196(1) reflects the principle that the hearing of every criminal case should take place in open court. The open justice principle has been enshrined in s 14 of the NZBORA and has been affirmed by the courts in a long line of decisions.
[101] Even when a defendant has been charged with an offence the court may make an order forbidding publication of the name, address or occupation of that person, only if satisfied of any of the matters listed in s 200(2) of the Criminal Procedure Act. That list includes circumstances where the publication would be likely to:
(a)Cause extreme hardship to the person charged with the offence or any person connected with that person;23
(b)Create a real risk of prejudice to a fair trial.24
[102] There is a high bar even for defendants to overcome for name suppression to be ordered. Here, no charges have been laid. There is simply an investigation. Mr Peters’ application falls well short of satisfying the Court that name suppression
23 Section 200(2)(a).
24 Section 200(2)(d).
should be ordered and in any event there would be a lack of utility in an order given there has been publication of Mr Peters’ name in an article which itself refers to an investigation by the SFO.
Costs
[103] The Director, as the successful party is prima facie entitled to costs. If the parties can agree the costs of this hearing a joint memorandum on costs is to be filed within 20 working days of the date of this judgment. If costs cannot be agreed the Director is to file and serve a memorandum within five working days of the date for the joint memorandum. Mr Peters is to file and serve a reply memorandum within five working days of the date of service of the Director’s memorandum.
[104] Costs memoranda are not to exceed four pages (excluding attachments). I will determine costs on the papers.
Gordon J
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