R v Banks
[2014] NZHC 1244
•5 June 2014
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI 2012-085-009093 [2014] NZHC 1244
THE QUEEN
v
JOHN ARCHIBALD BANKS
Hearing: 19–22, 26–27 and 29 May 2014 Appearances:
P E Dacre QC and A Van Echten for the Crown
DPH Jones QC and K Venning for the DefendantVerdict and Reasons for Verdict:
5 June 2014
REASONS FOR VERDICT OF WYLIE J
R v BANKS [2014] NZHC 1244 [5 June 2014]
INDEX
Paragraph Introduction ............................................................................................................[1] Judge alone trial .....................................................................................................[5] Structure ...............................................................................................................[12] Relevant rules of law and practice .......................................................................[13]
The applicable law – The Local Electoral Act 2001 ............................................[21] (a) Is the person whose conduct is under scrutiny a candidate? ....................[30] (b) Transmission of return of electoral expenses? ..........................................[31] (c) Was the return false in any material particular?.......................................[32] (d) Knowledge of the falsity ............................................................................[37]
Overall factual setting ..........................................................................................[49] The mayoral campaign.........................................................................................[49] Information provided to candidates .....................................................................[55] Mr Banks’ campaign team....................................................................................[58] Fundraising for the mayoral campaign ...............................................................[60] How donations were sought .................................................................................[67] The return of electoral expenses ..........................................................................[71]
Elements of the offence – evidence, reasoning and conclusions .........................[82] Was Mr Banks a candidate? .................................................................................[82] Did Mr Banks transmit the return of electoral expenses? ...................................[83] Was the return of electoral expenses transmitted by Mr Banks false in one
or more material particulars? ..............................................................................[84] (a) The SkyCity donation.................................................................................[86] (b) The Dotcom donations.............................................................................[101] Did Mr Banks know of the falsities? ..................................................................[135] (a) The SkyCity donation...............................................................................[141] (b) The Dotcom donations.............................................................................[148]
Introduction
[1] The Honourable Mr John Banks is charged with one count of transmitting a return of electoral expenses, knowing it to be false in one or more material particulars.
[2] The indictment reads as follows:
The Solicitor-General charges that John Archibald Banks on or about the
9th day of December 2010 at Auckland, being a candidate, transmitted a return of electoral expenses knowing it to be false in one or more material
particulars.
Particulars: The return of electoral expenses and donations for the 2010
Auckland mayoral election signed by the said John Archibald Banks listed as
“anonymous” the following donations and in respect of which he knew the identity of the donor:
i) Donation in the sum of $15,000 made by Skycity Management
Limited and received on or about 24 May 2010;
ii) Donation in the sum of $25,000 made by Megastuff Limited on behalf of Kim Dotcom and received on or about 14 June 2010;
iii) Second donation in the sum of $25,000 made by Megastuff Limited on behalf of Kim Dotcom and received on or about 14 June 2010.
[3] I have found Mr Banks guilty of the charge. I am not persuaded beyond reasonable doubt that Mr Banks knew that the return of electoral expenses was false in relation to the $15,000 donation made by SkyCity Management Limited (SkyCity), but I am sure that Mr Banks knew that the return was false in relation to the two donations, each of $25,000, made by Megastuff Limited, on behalf of Mr Dotcom.
[4] These are my reasons for returning this verdict.
Judge alone trial
[5] This matter proceeded as a Judge alone trial.
[6] The information against Mr Banks was laid on 10 December 2012. Sections
105 and 106 of the Criminal Procedure Act 2011 apply to Judge-alone trials. However, those provisions only came into force on 1 July 2013. Pursuant to s 397 of the Act, this matter has been determined in accordance with the law as it was before that date.
[7] A Judge hearing a criminal trial without a jury is required to deliver reasons for his or her verdict. The Court of Appeal in R v Connell1 held that this requires:
... a statement of the ingredients of each charge and any other particularly relevant rules of law or practice; a concise account of the facts; and a plain statement of the Judge's essential reasons for finding as he does. There should be enough to show that he has considered the main issues raised at the trial and to make clear in simple terms why he finds that the prosecution has proved or failed to prove the necessary ingredients beyond reasonable doubt. When the credibility of witnesses is involved and key evidence is definitely accepted or definitely rejected, it will almost always be advisable to say so explicitly.
[8] In R v Eide,2 the Court of Appeal confirmed this principle, but noted that there can be problems with “short-form” judgments. It made the following observations:
[21] The problems with short-form judgments are particularly acute in fraud prosecutions. The parties (that is, the prosecutor and accused) are obviously entitled to know the key elements of the Judge’s reasoning. In a case of any complexity, this will not be possible unless the Judge provides an adequate survey of the facts. As well, in this context a Judge is addressing an audience which is wider than the prosecutor and accused. If the verdict is guilty, the Judge should explain clearly the features of the particular scheme which he or she finds to be dishonest. There is a legitimate public interest in having the details of such a scheme laid out in comprehensible form. Similar considerations apply if the verdict is not guilty. Further, some regard should be had to how the case will be addressed on appeal. A judgment which is so concise that some of the key facts in the case are required to be reconstructed by this Court on appeal is too concise.
[9] In the more recent case of Wenzel v R,3 the Court of Appeal again endorsed the Connell approach and affirmed the comments in Eide.
1 R v Connell [1985] 2 NZLR 233 (CA) at 237–238.
2 R v Eide [2005] 2 NZLR 504 (CA) at [21].
3 Wenzel v R [2010] NZCA 501 at [39]–[40].
[10] I have set out the reasons for my verdict relatively fully. I have done so for the following reasons.
(a) First, Mr Banks is entitled to know why I have reached my verdict.
He is entitled to know that I have considered the main issues, the evidence I have accepted and, where I have reached findings on the credibility of witnesses, why I have made those findings.
(b)Secondly, Mr Banks is a sitting Member of Parliament. He was formerly a member of the Cabinet and a Minister of the Crown. He is a member, and was formerly the leader, of the ACT Party. Mr Banks is the only member of the ACT Party currently in Parliament and the ACT Party currently supports the Government. My verdict may have consequences at a political level.
(c) Thirdly, there has been, and still is, considerable public interest in this case. There is a legitimate public interest in the verdict and in my reasons for reaching that verdict.
[11] However, I caution that this trial involved events which took place in late-2010. Most witnesses were interviewed in mid-2012. They gave their evidence at trial in mid-2014. Memories have understandably dimmed. There are conflicts between a number of the witnesses. Some of these conflicts are important and I have addressed them. Other of the conflicts are peripheral to the matters ultimately in issue. It was not necessary for me to resolve all of the factual conflicts and I have not attempted to do so.
Structure
[12] I first address some of the more significant rules of law and practice that I took into account as the sole judge of the facts in this case. I then address the law which applies to the charge and discuss the elements of the offence from a legal perspective. Next, I set out my findings in relation to the overall factual setting. Finally, I set out my analysis of the principal evidence relevant to the elements of the offence, and detail my reasoning and my overall conclusions.
Relevant rules of law and practice
[13] This was a criminal trial. It follows that the Crown had to prove each element of the charge beyond reasonable doubt before I could bring in a verdict of guilty.
[14] The starting point was the presumption of innocence. The onus was on the Crown. It had to prove that Mr Banks was guilty beyond reasonable doubt. Proof beyond reasonable doubt is a very high standard of proof, which the Crown could meet only if I was sure that Mr Banks was guilty. It was not enough for the Crown to persuade me that Mr Banks was probably guilty or even that he was very likely guilty of the charge he faced. Having said this, it is virtually impossible to prove everything to an absolute certainty when dealing with the reconstruction of past events, and the Crown did not have to do so. Rather, it had to prove the charge beyond reasonable doubt. A reasonable doubt is an honest and reasonable uncertainty left in my mind about the guilt of Mr Banks, after I had given careful and
impartial consideration to all of the relevant evidence.4
[15] Secondly, Mr Banks did not give evidence at the trial. There was no obligation on him to do so and the fact that he did not give evidence did not add to the case against him. Mr Banks did call evidence. Again, he did not have to do so. That Mr Banks did call evidence did not change the burden of proof. Mr Banks did not have to prove his innocence. Rather, it was for the Crown to prove his guilt.
[16] Thirdly, the Crown invited me to draw inferences, particularly as to Mr Banks’ knowledge at the relevant time – namely, when the return of electoral expenses was transmitted. Whether I drew the inferences the Crown asked me to draw was for me to determine, as judge of the facts. The inferences I drew were conclusions drawn from facts that I accepted were reliably established. They were
not guesses.
4 R v Wanhalla [2007] 2 NZLR 573 (CA) at [49].
[17] Fourthly, Mr Banks called a large number of character witnesses.5 They gave evidence as to his honesty, trustworthiness and integrity. I was told that Mr Banks’ honesty and integrity defines him. Mr Jones QC, acting for Mr Banks, emphasised this evidence and submitted that it was relevant to Mr Banks’ credibility in his police interview and also to the likelihood that he would have committed the offence charged.
[18] I accepted this submission,6 and I took the evidence into account in assessing Mr Banks’ guilt. I bore in mind, however, that, logically, there is always a first time for everyone who offends, and that evidence of good character is not itself a defence.
[19] Finally, I record that the matters at issue in this case have been the subject of considerable debate, both in Parliament, and in the news media. I ignored this material. I considered the charge and reached my verdict solely on the evidence adduced before me at the trial.
[20] I record that this is but a potted and truncated summary of some of the more important rules of law and practice which I applied in this trial. It is not, and is not meant to be, exhaustive.
The applicable law – The Local Electoral Act 2001
[21] The charge was brought under s 134 of the Local Electoral Act 2001 (as it was in 2010). Relevantly, it then provided as follows:
134 False return
(1) Every candidate commits an offence who transmits a return of electoral expenses knowing that it is false in any material particular, and is liable on conviction on indictment to imprisonment for a term not exceeding 2 years or to a fine not exceeding $10,000.
…
5 Ms MB Quinn, Mr IM Revell, Mr DJ Hay, Dame Jennifer Gibbs, Mr RB Langridge, Ms PM White, Mr RWJ Wilson and Mr JA Jamieson.
6 R v Aziz [1996] AC 41 (HL), cited with approval in Wi v R [2009] NZSC 121, [2010] 2 NZLR 11 at [29].
[22] To put the offence in context, s 109 of the Act, as it stood in 2010, required every candidate at any local election to transmit to the electoral officer a return setting out the candidate’s electoral expenses, the name and address of each person who made an “electoral donation” to the candidate, and the amount of each electoral donation. If an electoral donation of money, or of the equivalent of money, was made to the candidate “anonymously”, and the amount of that donation exceeded
$1,000, then the amount of the donation, and the fact that it was received anonymously, also had to be set out. The return had to be filed within 55 days after the date on which the successful candidate at any election was declared to be elected.
[23] Every return had to be in the form which was prescribed in Schedule 2 to the Act or to similar effect. Although it is referred to in the Act as a return of electoral expenses, the form was in two parts. The first part provided for electoral expenses to be set out. The second part provided for electoral donations to be set out.
[24] The words “electoral donation” were defined in s 104. In 2010, it relevantly provided as follows:
electoral donation, in relation to a candidate at an election,—
(a) means a donation (whether of money or the equivalent of money or of goods or services or of a combination of those things) of a sum or value of more than $1,000 (such amount being inclusive of any goods and services tax and of a series of donations made by or on behalf of any one person that aggregate more than $1,000) made to the candidate, or to any person on the candidate's behalf, for use by or on behalf of the candidate in the campaign for his or her election; and
…
[25] The amount of any particular donation was clearly relevant. Small donations of less than $1,000 did not have to be set out in the return. Donations of more than
$1,000 did have to be disclosed, but there was no statutory limit on the amount of any one donation, nor on the total donations, which a candidate could receive.
[26] The word “anonymous” was also defined in s 5 of the Act. In 2010, in relation to an “electoral donation”, it meant a donation that was made in such a way that the candidate concerned did not know who made the donation.7
[27] The definition emphasised the way in which a donation was made and the candidate’s knowledge of the donation. It was clear that the donation must have been actually made, and not just promised and, under s 109, it was only donations which had been received that had to be set out in the return.
[28] There were four elements to the offence created by s 134(1). They were as follows:
(a) Was the person whose conduct is under scrutiny a candidate?; (b) Did the candidate transmit a return of electoral expenses?;
(c) Was the return of electoral expenses false in any material particular?;
and
(d)Did the candidate know that the return of electoral expenses was false in any material particular at the time of the transmission?
[29] Both Mr Jones and Mr Dacre QC for the Crown were agreed that these were the elements of the offence. I comment briefly on each.
(a) Is the person whose conduct is under scrutiny a candidate?
[30] The Act was directed to the modernisation and regulation of local elections and polls. Inter alia, it placed various obligations on candidates in local elections. The obligation to file a return of electoral expenses imposed by s 109 was on the candidate; it was the candidate whose knowledge was in issue when determining whether an electoral donation could be said to be anonymous; it was the candidate
who committed the offence under s 134(1) if a false return was filed.
7 Local Electoral Act 2001, s 5(1), definition of “anonymous”.
(b) Transmission of return of electoral expenses? [31]
The word “transmit” was not defined in the Act.
Its ordinary English
meaning is simply to cause a thing to pass, go or be conveyed to another person, place or thing.8 The use of the word in the Act was consistent with this meaning and I adopted it.
(c) Was the return false in any material particular?
[32] The word “false” was also not defined in the Act. As a matter of ordinary English usage, the word has two distinct meanings – erroneous and purposely untrue.9 This was noted by the Court of Appeal in the context of the Customs Act
1966. It said as follows:10
Recourse to any standard dictionary demonstrates that the word "false" has two distinct and well recognised meanings, both of which may be used in relation to statements or representations: erroneous, wrong, not true; or purposely untrue, mendacious, deceitful. The sense in which it is used depends on the context in which it appears…
[33] In the present case, the context was the Local Electoral Act. Inter alia, one of the principles the Act was intended to implement was the promotion of public confidence in local electoral processes.11 The disclosure of significant donations over $1,000, as required by the Act, contributed to the provision of a transparent electoral system. I note and agree with the observations of Heath J at an earlier stage in this case.12
Disclosure of donations is a transparent means by which electors can ascertain who has contributed money to fund a particular election campaign. In 1986, the Royal Commission on the Electoral System13 (albeit in the context of elections held under the Electoral Act 1993) observed that “in the absence of disclosure ... there is no way of knowing whether or not a candidate’s financial position is likely to influence decisions taken if the candidate is elected, or whether the candidate is improperly accepting
8 The New Shorter Oxford English Dictionary (5th ed, Oxford University Press, Oxford, 2002) vol
2 at 3329.
9 The New Shorter Oxford English Dictionary (5th ed, Oxford University Press, Oxford, 2002) vol
1 at 919.
10 Minister of Customs v Admail International Ltd CA71/89, 31 October 1989 at 4; see also R v
Gill (1999) 19 NZTC 15,526 (CA) at [17]–[21].
11 Local Electoral Act 2001, s 4(1)(c).
12 Banks v District Court at Auckland [2013] NZHC 3221 (HC) at [5].
13 Report of the Royal Commission on the Electoral System Towards a Better Democracy
(December 1986).
personal donations in exchange for promises of future action once elected”. The statutory provisions dealing with the need for disclosure of donations must be read in that context.
[34] Some assistance can also be gleaned from s 134(2)(a). It created an offence of strict liability where a candidate transmitted a false return, but provided that a candidate could escape liability if, inter alia, he or she proved that there was no intention “to misstate or conceal the facts”.
[35] In my judgment, the word “false” used in s 134(1) should properly be construed to mean erroneous, wrong or untrue. There is no need to go further and require that an electoral return is false only where it is purposely untrue, mendacious or deceitful. It is unnecessary to attribute to the word any mens rea element, because
knowledge of the falsity was a separate element to the offence created by s 134(1).14
[36] The words “any material particular” also drew their meaning from the context in which they appeared. The word “material” introduced a question of degree. Clearly, the statute implied that not every particular would be material. For example, if a donor’s name was simply misspelt, I doubt that any Court would find falsity in a material particular. In the present case, s 109 assisted in determining what materiality embraced. Where a donor donated more than $1,000, the section required the disclosure of the name and address of the donor. It also required disclosure of the amount of the donation. Where a donation of more than $1,000 was made anonymously, then that fact had to be set out as well as the amount of the donation. The scheme of the Act was such that the public, who had the right to
inspect returns of electoral expenses,15 could readily see who had financially
supported a candidate, and therefore could ascertain to whom a candidate might be beholden. Where anonymity could properly be claimed, a candidate would not be beholden because he or she would not know who had made the donation. Nevertheless, the amount of the donation, and the fact that it was made anonymously, were required to be disclosed. The disclosure of identity, where known, and anonymity, where properly claimable, were, in my judgment, material
particulars. So was the amount of any donation over $1,000.
14 R v Gill, above n 10, at [20].
15 Local Electoral Act 2001, s 110.
(d) Knowledge of the falsity
[37] Section 134(1) used the word “knowing”. In order to have committed an offence under the section, it was necessary that, when the candidate transmitted the return of electoral expenses, he or she knew that it was false in a material particular.
[38] In the criminal law generally, it is commonly accepted that there is more than one way in which a person can be said to “know” something.16
[39] First, knowledge can consist of actual knowledge or correct belief.17 For example, in R v Simpson,18 the Court of Appeal was dealing with an assault on an officer in the execution of his duty. At issue was whether Mr Simpson assaulted the constable with intent to obstruct him in the execution of his duty. The Court noted
that the intent required was founded on Mr Simpson’s assumptions as to the status of
the person assaulted and the duty on which he was engaged. It said as follows: 19
...We use the term "assumption" to refer comprehensively to any positive state of mind in relation to these matters. In our opinion what the Crown must prove is that the defendant assumed that the person he assaulted was a constable who was acting in the execution of his duty and that he did intend to obstruct him in the performance of his duty.
This type of knowledge was further considered by the Court of Appeal in R v Crooks,20 in the context of a charge of receiving. The offence required receipt of stolen goods knowing that they had been dishonestly obtained. The Court observed as follows: 21
...A person is said to "know" something when he has ascertained, by physical or mental perception, a state of facts or circumstances which creates in his mind a certainty that the point of his inquiry is free from doubt...
16 AP Simester and WJ Brookbanks, Principles of Criminal Law (4th ed, Brookers, Wellington,
2012) at [4.5]; see also David Ormerod, Smith and Hogan’s Criminal Law, (13th ed, Oxford
University Press, Oxford, 2011) at [5.25]–[5.27].
17 Simester and Brookbanks, above n 16. at [4.5].
18 R v Simpson [1978] 2 NZLR 221(CA).
19 At 225.
20 R v Crooks [1981] 2 NZLR 53 (CA).
21 At 56; and see, in regard to belief, Kerr v R [2012] NZCA 121 at [14]–[19].
[40] Secondly, knowledge can be attributed to a defendant where he or she is “wilfully blind”. While a precise definition of wilful blindness remains elusive,22 it seems that in New Zealand, a defendant is wilfully blind if he or she deliberately chooses not to inquire whether something is true because he or she has no real doubt what the answer is going to be, or because he or she wants not to know.23 In such cases, the law can, in appropriate cases, presume knowledge on the part of the defendant.24
[41] The Court of Appeal also discussed this type of knowledge in Crooks. It held as follows:25
…But where the circumstances are so compelling in their attribution of dishonest origin to the property acquired as to create an inference that the accused was aware that the property was stolen, it is permissible for a trial Judge to direct the jury that a failure by the defendant to make some inquiry may be taken into account in considering whether knowledge or belief has been established beyond reasonable doubt by the prosecution…
...The question will be whether the defendant himself, in abstaining from inquiry, can fairly be inferred to have taken that course because he knew what the answer was going to be. If that was his motive, then his concern as to the origin of the property, whether admitted or proved, was more than mere suspicion. What he had in his mind was in truth a belief, and the jury would be entitled to infer that it was his belief which motivated his decision not to inquire.
The Court went on to say:26
If the jury are satisfied that the defendant, whilst lacking direct knowledge on the point, nevertheless formed the view when receiving it that the property had been dishonestly obtained, then they are entitled to consider the question why he made no inquiry. If they come to the conclusion that the defendant deliberately abstained from inquiry because he knew what the answer was going to be, then they will be entitled to infer that his omission to inquire stemmed not from mere suspicion, but from an actual belief on his part that the goods had been dishonestly obtained. But if the jury should decide that the state of mine of the defendant was such that he merely entertained a doubt as to whether or not the property had been honestly obtained then they must not use against him, as evidence of guilt, the fact that he failed to inquire. This is because he may have abstained from inquiry
22 Smith and Hogan’s Criminal Law, above n 16, at 5.2.7; Bruce Robertson (ed) Adams on
Criminal Law – Offences and Defences (online ed) at [CA 20.32].
23 Simester and Brookbanks, above n 16, at [4.5.1]; Adams, above n 22, at [CA 20.32].
24 Hickman v Turn and Wave Ltd [2012] NZSC 72, [2013] 1 NZLR 741 at [149]–[152], in the context of s 37 of the Securities Act 1978.
25 R v Crooks, above n 20, at 58.
26 At 59 (emphasis added).
because he was gullible, or careless, or believed that his suspicion about the transaction might in fact be unjustified.
The Court held that the trial Judge had not erred in directing the jury, that if they accepted that the accused had turned a blind eye to the acquisition, then “they were entitled to infer that no questions were asked because the [accused] knew what the answer would be”.27
[42] The principle of wilful blindness was further affirmed by the Court of Appeal, (sitting as a full court), in Millar v Ministry of Transport. It was considering whether mens rea was a necessary ingredient to the offence of driving while disqualified. McMullin J observed as follows:28
For over a century there have been cases in which it has been held that wilful blindness can be regarded as the equivalent of intent. R v Sleep29 is an early instance of an accused's guilt being put on the basis either of an actual intent or the wilful shutting of his eyes. R v Crooks30 is a recent case in which the "blind eye" direction was discussed in a receiving case. Many of the decided cases concern the position of an aider and abettor said to have connived at an offence by wilfully shutting his eyes to an obvious means of knowledge. When a person deliberately refrains from making inquiries because he prefers not to have the result; when he wilfully shuts his eyes for fear that he may learn the truth; he may for some purposes be treated as having the knowledge which he deliberately abstained from acquiring...
[43] It was also considered by the Court of Appeal in R v Martin.31 The Court observed, in the context of a charge of importing cocaine under the Misuse of Drugs Act, as follows:32
Mr King is wrong in suggesting wilful blindness will not suffice. In a case such as this, it will suffice if the Crown can prove beyond reasonable doubt that the accused (importer) had her suspicions aroused as to what she was carrying, but deliberately refrained from making further inquiries or confirming her suspicion because she wanted to remain in ignorance. If that is proved, the law presumes knowledge on the part of the accused. The fault lies in the deliberate failure to inquire when the accused knows there is reason for inquiry.
27 At 59.
28 Millar v Ministry of Transport [1986] 1 NZLR 660 (CA) at 674 (emphasis added).
29 R v Sleep (1861) LJMC 170.
30 R v Crooks, above n 20.
31 R v Martin [2007] NZCA 386.
32 At [10] (emphasis added).
… There is a very useful discussion on this topic in Simester and Brookbanks Principles of Criminal Law.33 The two professors suggest that the concept of “wilful blindness” can arise in two situations. The first arises where the accused “shuts his eyes and fails to inquire ‘because he knows what the answer is going to be’”, citing R v Crooks.34 The second situation arises “if the means of knowledge is easily to hand and D realises the likely truth of a matter but refrains from inquiry in order not to know”. While we do not disagree with the professors’ categorisations, we consider that the difference between the two situations is largely semantic. We think in most situations the “wilful blindness” test could be summarised as we have done at [10] above. Certainly trial judges should attempt to encapsulate the “wilful blindness” concept in one formulation, not two, when providing an explanation to a jury. The precise formulation in any given case should be carefully tailored to the facts of that case.
[44] Perhaps not surprisingly, there are no cases which have dealt with the meaning of the words “knowing [the return of electoral expenses] to be false” contained in s 134(1) of the Local Electoral Act.
[45] Mr Jones submitted that the state of knowledge required by s 134(1) is actual knowledge. He referred to s 134(2) of the Act. As I have already noted, it provided that every candidate committed an offence who transmitted a return of electoral expenses that was false in any material particular, unless the candidate proved that he or she had no intention to misstate or conceal the facts, and that he or she took all reasonable steps to ensure that the information was accurate. Mr Jones argued that this provision created an offence of strict liability, because no element of knowledge was required. He contrasted this provision with subs (1), which required knowledge of the falsity. He argued that it followed that actual knowledge of falsity was required under subs (1). He also relied on a judgment of Heath J in Mortimer v
Commissioner of Inland Revenue.35
[46] I do not accept Mr Jones’ submission, for the following reasons:
(a) I cannot see that the strict liability offence created by s 134(2) dictated what constituted knowledge in s 134(1). The two subsections dealt
with different situations and they were conceptually different;
33 AP Simester and WJ Brookbanks Principles of Criminal Law (3rd, Brookers, Wellington, 2007)
at [4.5.1].
34 R v Crooks, above n 20, at 58.
35 Mortimer v Commissioner of Inland Revenue (2002) 20 NZTC 17,797 (HC).
(b)I do not consider that the decision in Mortimer assists. Heath J was there dealing with s 62(1)(d) of the Goods and Services Tax Act 1985. It provided that every person committed an offence who made a false return, knowing it to be false, or being reckless as to whether it was false. Heath J held that knowledge in that context meant “actual
knowledge”.36 In my view, this finding was confined to the context in
which it was made. Recklessness involves actual knowledge of a danger or risk and persistence in a course of conduct which creates a risk that the prohibited result will occur.37 Wilful blindness is to be distinguished from recklessness, and s 134(1) does not extend to recklessness.
(c) In one other case, Severinsen v Department of Social Welfare,38 an offence requiring knowledge, but not extending to recklessness, was not construed as being limited to actual knowledge. Penlington J, interpreting s 127 of the Social Security Act 1964, held that the phrase “knowing it to be false in a material particular” extended to wilful blindness.
(d)I also note that, in the present case, in rejecting Mr Banks’ application for judicial review of the District Court decision made in relation to committal, Heath J accepted that wilful blindness would suffice, noting that:39
A fact finder would necessarily consider whether Mr Banks deliberately refrained from reading the donation part of the return in order to deny knowledge of the absence of disclosure…
[47] Underpinning the doctrine of wilful blindness is the principle that a defendant should not be able to shield himself or herself from criminal liability by deliberately
remaining in ignorance. As Cooke P, for himself and for Richardson J, put it in
36 At [36].
37 R v Martin, above n 31, at [12].
38 Severinsen v Department of Social Welfare HC Hamilton AP1/94, 31 May 1994 at [19].
39 Banks v District Court at Auckland [2013] NZHC 3221 (HC) at [42].
Millar v Ministry of Transport, the doctrine of wilful blindness carefully applied,
should be “a major safeguard against spurious claims of lack of knowledge”.40
[48] In my judgment, the knowledge required by use of the phrase “knowing [the return of electoral expenses] to be false” in s 134(1) of the Act embraced not only actual knowledge, but also wilful blindness in the sense I have discussed. It follows that the Crown had to prove beyond reasonable doubt either that Mr Banks actually knew or correctly believed the return of electoral expenses to be false, or that, having formed the view that the return was likely to be false, he deliberately refrained from making further inquiries because he knew what the answer was going to be, or because he wanted not to know.
Overall factual setting
The mayoral campaign
[49] Mr Banks has long been involved in politics. He has been and he still is involved in national politics. The evidence disclosed that he first stood for Parliament in about 1978. He ultimately served as a Member of Parliament and he was the Minister of Police for a number of years commencing in about September or October 1990. As I have already noted, he is currently a Member of Parliament and was, until recently, a Cabinet Minister. He has also been involved in local politics. He was Mayor of Auckland from 2001–2004. He stood for the mayoralty again in
2004, but was unsuccessful. He was re-elected Mayor in 2007 and he held the office until 2010.
[50] Mr Banks was a candidate in the 2010 Auckland mayoral election. This was the first election for the Mayor of the new Auckland “Super City”, where a single Council replaced several smaller Councils.41
[51] Nominations for the mayoral election opened on 23 July 2010, and they closed on 20 August 2010. Nomination forms were required to be accompanied by a
deposit of $200.
40 Millar v Ministry of Transport, above n 28, at 669.
41 See the Local Government (Tamaki Makaurau Reorganisation) Act 2009; Local Government
(Auckland Council) Act 2009.
[52] Mr Banks completed the required nomination paper, and the $200 deposit was tendered from his campaign bank account. The nomination was processed by the electoral officer on 19 August 2010, and a receipt was issued to Mr Banks on the same day.
[53] The election was conducted by way of postal vote. Voting documents were delivered between 17 and 22 September 2010, and election day was 9 October 2010. The results of the election were declared on 14 October 2010.
[54] Mr Banks’ mayoral campaign was unsuccessful.
Information provided to candidates
[55] Part of the nomination form comprised a largely blank return of electoral expenses form. The electoral expenses part of the form did set out the estimated maximum electoral expenses which, under the legislation, a candidate could spend in the last three months of the election. It also, on the page headed “electoral donations”, summarised the relevant statutory provisions, and recorded when a donation could properly be said to be anonymous.
[56] The electoral officer, Mr Ofsoske, told me that candidates also received a comprehensive candidate information booklet. The booklet had a section dealing with the required return of electoral expenses. In addition, the electoral office ran meetings or seminars for potential candidates.
[57] Mr Banks stated in his police interview that he could not remember seeing the candidate information book. Nor could he recall receiving an invitation to attend any of the candidates’ meetings or seminars, and Mr Ofsoske could not recall seeing Mr Banks at any of the meetings/seminars which were held, (and he attended all but one or two of those meetings).
Mr Banks’ campaign team
[58] For the 2010 mayoral campaign, Mr Banks put together an experienced campaign team comprising approximately 15–20 people. The main members of the
team were Mr Lance Hutchison – a bank manager and a Justice of the Peace, Ms Michelle Boag – a consultant who has been involved in politics for a number of years, including serving a term as President of the National Party, and Mr Aaron Bhantaghar. Mr Hutchison was the treasurer responsible for campaign finances; Ms Boag was in charge of fundraising and she chaired campaign meetings; Mr Bhantaghar was the strategist for the campaign. They were all volunteers. There was also one salaried team member – Mr Scott Campbell. Mr Campbell is a strategic communications and public relations consultant. He worked very closely with Mr Banks during the campaign. He was described by others as being Mr Banks’ “handler”.
[59] Some members of the team had worked with Mr Banks on previous electoral campaigns. Mr Hutchison, for example, had worked with Mr Banks on three, or perhaps four, earlier campaigns.
Fundraising for the mayoral campaign
[60] Fundraising was a matter of significant concern from the outset. The campaign team thought that it might need to raise up to $1 million. Various brainstorming sessions were held and a wish list was put in place. The campaign team hoped to attract 10 major donors, each donating $25,000. Prospective major donors were identified from the National Business Review rich list. Anybody on the campaign team could approach these individuals, including Mr Banks.
[61] General fundraising was also promoted. The campaign team ordered a number of deposit slip books, so that pre-printed bank deposit slips giving the campaign’s bank account details could be handed out to prospective donors.
[62] Donations to the campaign could be made in a number of ways:
(a) they could be paid directly into the campaign bank account – for example, by direct credit, by internet payment, by using the pre- printed bank deposit slips, or by using standard bank deposit slips, having first ascertained the campaign’s bank account details. The account details were available on the campaign’s website;
(b) they could be posted by cheque to a private bag address in Takapuna.
That postal address was monitored by Mr Hutchison. He collected and dealt with all mail received;
(c) they could be handed direct to a member of the campaign team, including Mr Banks; or
(d) they could be handed over at general fundraising events.
[63] Mr Banks made a number of contributions to the campaign. He made an initial donation to get the campaign underway and he was the campaign’s largest donor by a considerable margin.
[64] The fundraising system adopted for the 2010 campaign had been in place over a number of preceding campaigns. It had been inherited by Mr Hutchison and Mr Banks, in his police interview, said that it had been in place for every campaign since 2001. Mr Banks also stated in his police interview that legal advice in relation to donations had been obtained in 2007, in relation to that campaign. There was no evidence suggesting that fresh advice was taken for the 2010 campaign.
[65] There was evidence suggesting that, at one stage, the use of a secret trust was considered. This would have been a way of more readily ensuring the anonymity of donors. It was rejected as not being within the spirit of the law. The campaign team, including Mr Banks, wanted the campaign’s financial affairs to be transparent.
[66] The campaign had a bank account with Westpac. That bank account had been in place for a number of years. For the 2010 electoral campaign, the name of the bank account was changed to “Team Banksie 2010”. Both Mr Banks and Mr Hutchison were signatories on the account, but Mr Hutchison was the only person who had online access to the bank account, and he received the bank statements at his home address. Mr Banks had no access to the online banking records. Nor did he see or look at the bank statements. As Mr Hutchison put it, the campaign was set up so that there was a “total brick wall between us, the finance team”, and Mr Banks. He said that Mr Banks was not really kept informed about
expenses, and that the only time dollars were mentioned was when the finance team needed another top up donation from Mr Banks personally.
How donations were sought
[67] Mr Banks, in his police interview, said that the campaign team was largely responsible for obtaining donations, and that it was kept “at arm’s length”. He said that if he saw somebody in the street who said that they would like to do something for his campaign, he would thank them, and indicate that he would get somebody to contact them. He might give them one of the pre-printed deposit slips so that they could put money into his campaign account. He said that he would tell people that they could make an anonymous donation, and if they were to do so, he would be very grateful. He said that he asked hundreds of people for money, and that if somebody in the street said, “Listen I’m supporting you”, he would say, “Where’s your money?” He said that if somebody said they would give him some money, he would ring them back the next day and thank them very much. When Mr Banks was explaining his understanding of anonymous donations, he noted as follows:
Well if I stopped you in the street and gave you a chit and you brought in
$1,000 and I didn’t know you’d done it, well you're anonymous.
He did say that if somebody said that they would support him, he would invariably write to that person quite quickly, and thank them for their support. He stated that if everybody who said that they would donate had given him money, millions would have been raised. In his words, “Many said they’d support me, few did.”
[68] As Mr Hutchison put it, Mr Banks was thanking people all of the time for their “support”. The thinking was that, despite what they had said, people might or might not have supported the campaign financially. If they had done so, then they were being thanked. If they had not done so, the “thank you for your support” was intended to be a reminder.
[69] Ms Boag confirmed that she was in charge of approaching people who had the ability to make larger donations, and requesting substantial donations from them. She said that she identified the individuals, some of whom she could approach on a personal basis. She also said that the team would meet with Mr Banks on a regular
basis, and that Mr Hutchison would update her and Mr Banks as to the state of the fundraising campaign and the total raised. She would report that she had approached:
this many people, that I thought that some of them, you know, I might say well I think that that one has committed to a donation, that one hasn’t, but again I would not necessarily know whether that had come through because sometimes people say yes I will give you a donation and it never arrives.
When she was asked about persons who had given donations over the $1,000 threshold, she said that she would not necessarily have told Mr Banks about these donations.
[70] Mr Hutchison himself did not approach anybody for a major donation. He understood that Ms Boag had approached a number of potential major donors. He did not understand Mr Banks to have succeeded in getting any $25,000 donations and said that Mr Banks never told him that he had done so.
The return of electoral expenses
[71] Mr Hutchison prepared the electoral return at issue in this case.
[72] Mr Hutchison prepared the schedule of electoral expenses from a spreadsheet he kept of expenses as they were incurred, and by reference to the invoices which he retained in a folder. In declaring donations, he used the bank statements as his primary source of information. When each bank statement came in, Mr Hutchison would go through it. Many of the credit entries on the bank statements did not disclose the name of the person or entity depositing the funds. Beside most of these deposits, he would record the word “anonymous” because the bank statement did not contain any narrative disclosing the depositor’s name. Where the depositor’s name was disclosed, he would often write the word “check”, and he would, if possible, check with the donor to see whether he or she wanted the donation to be anonymous. He said that he would record a donation as being anonymous, if the donor wanted it to be anonymous, and if “we” – by which he meant the whole campaign team – did not know who the donation had come from.
[73] Mr Hutchison did speak to Ms Boag on occasion to see if she knew where particular donations had come from.
[74] Mr Hutchison did not ask Mr Banks where particular donations might have come from. He said that the reason for this was because some people might have wanted to make their donations anonymously. He was adamant that he had not asked Mr Banks about any of the donations at issue in this case. Mr Hutchison also told me that he never had any general discussions with Mr Banks about donations. He said that, at the outset of the campaign, the rules for donations were set out, and that there were no discussions during the campaign because, from the outset, the finance team was in charge of all finances and cashflow, and that this was intentional. The idea was that Mr Banks should concentrate on running the City (as the incumbent Mayor) as well as campaigning as part of the electoral campaign. He said that he never asked Mr Banks “who he had seen” and that there were no generalised discussions regarding donations. He accepted that he was dependent on what Mr Banks told him about any donations he (Mr Banks) was aware of.
[75] Mr Hutchison told me that Mr Banks did tell him that he had collected one donation, that he had picked up the cheque from the donor and banked it. Mr Banks told Mr Hutchison the amount of the donation, so that Mr Hutchison could pick it up when it came through on the bank statement. The identity of this donor was disclosed in the return of electoral expenses transmitted.
[76] Mr Hutchison explained that the same system for dealing with donations that came in had been used in earlier campaigns that he had run for Mr Banks.
[77] Mr Hutchison had never read the Local Electoral Act. Nor had he seen or considered the candidate information booklet, but he had read the relevant parts of the return of electoral expenses that was required to be transmitted to the electoral officer. As I have already noted, it summarised the relevant statutory provision dealing with electoral expenses and donations.
[78] It was Mr Hutchison’s decision whether or not donations to Mr Banks’ campaign would be declared as anonymous. In reaching his decision on each donation, he applied what he called a “litmus test” – that is whether or not Mr Banks, as the candidate, knew who had made the donation. As he put it, “it was my call that it met all the criteria for listing as anonymous”.
[79] The return at issue is dated 9 December 2010. There were two pages setting out in detail the electoral expenses incurred. There were then five pages setting out the donations received. In a number of cases, the identity of the donor was disclosed. In other cases, it was recorded that the donation was anonymous. In each case, there was a description of the donation – generally recording that it was by way of bank deposit, and in each case, the amount of the donation was set out. There were a number of donations for $15,000 recorded, but none of these donations was attributed to SkyCity. There were also five donations of $25,000 recorded. All were recorded as being anonymous, and none of them were attributed to either Mr Dotcom, or Megastuff Limited.
[80] The return was signed by Mr Banks on 9 December 2010. I discuss the circumstances below. It was required to be transmitted to the electoral officer on or before 10 December 2010. Mr Hutchison gave evidence that, immediately after Mr Banks signed it, he lodged it with the electoral officer. Mr Hutchison noted:
It was the last thing of a disappointing campaign and it was actually a pain to put the return together.
[81] Against this background, I turn to discuss the elements of the offence, and the particulars alleged in the indictment.
Elements of the offence – evidence, reasoning and conclusions
Was Mr Banks a candidate?
[82] There was no dispute in regard to this issue. Mr Jones accepted that Mr Banks was a candidate. I have already detailed the nomination form signed by Mr Banks and the receipt he received for it.42
Did Mr Banks transmit the return of electoral expenses?
[83] Again, there was no issue in this regard. Mr Jones, on behalf of Mr Banks, accepted that Mr Banks, via Mr Hutchison, transmitted the return of electoral
expenses to the electoral officer.43
42 See above at [52].
43 See above at [80].
Was the return of electoral expenses transmitted by Mr Banks false in one or more material particulars?
[84] The falsity alleged by the Crown was the recording of three donations as coming from anonymous donors, when the identity of those donors was known to Mr Banks.
[85] There were three different particulars detailed in the charge – one in relation to a donation made by SkyCity and the other two in relation to donations made by Megastuff Limited on behalf of Mr Dotcom. The SkyCity donation needs to be considered separately from the donations from Mr Dotcom because the donations were made in very different circumstances.
(a) The SkyCity donation
[86] SkyCity had not previously donated to an Auckland mayoral campaign. In
2010, it was approached by the campaign team working for one of the two main candidates, Mr Len Brown, and asked to donate. The decision was made at Chief Executive and Board level to make a donation to Mr Brown’s campaign, and to make a similar donation to the other main candidate – Mr Banks.
[87] A cheque for $15,000 to support Mr Brown’s campaign was handed to
Mr Brown at a luncheon attended by SkyCity’s Chief Executive, Mr Nigel Morrison.
[88] In regard to the donation to Mr Banks, a meeting was set up between Mr Banks and Mr Morrison. A Ms Anna McKinnon, who was Mr Morrison’s executive assistant, could not recall whether she arranged the meeting or whether Mr Morrison did it himself. Mr Morrison recalled that Ms McKinnon had either directly or indirectly arranged the meeting. The meeting was scheduled for 24 May
2010.
[89] On 21 May 2010, Ms McKinnon requested SkyCity’s accounts department to raise a cheque for $15,000, being the amount which was to be donated to Mr Banks’ campaign. The cheque was initially drawn in favour of Mr Banks personally. It was in the wrong name and a Mr Andrew Gaukrodger, who was SkyCity’s manager of
Government and Industry Affairs asked Ms McKinnon to organise a new cheque in the name of Team Banksie 2010.
[90] When the new cheque was prepared, it was signed by an unknown signatory, and then countersigned by Mr Morrison. Ms McKinnon put the cheque in an envelope and the envelope was sealed. It was a SkyCity envelope with the SkyCity logo on its corner. Ms McKinnon said that there was no compliments slip with the cheque, and Mr Morrison doubted that there would have been a compliments slip in the envelope. Ms McKinnon handed the envelope to Mr Morrison.
[91] The meeting which had been set up with Mr Banks took place on Monday,
24 May 2010. Mr Morrison met with Mr Banks personally. Mr Morrison said that the sole purpose of the meeting, which he described as very short, was “to hand over a donation”. This duly occurred.
[92] Mr Banks then returned to his office at the Town Hall. He handed the envelope to his “handler”, Mr Campbell, and told Mr Campbell to give the envelope to Mr Hutchison. Mr Banks then went into his office.
[93] Mr Hutchison was, in fact, only some 10 paces away, but that would not have been known to Mr Banks. Mr Hutchison did not generally work at the Town Hall, and there was no direct line of sight to him. There is no evidence suggesting that Mr Banks knew that Mr Hutchison was nearby.
[94] Mr Campbell said that the envelope was sealed when he received it. He said that he gave the envelope to Mr Hutchison, telling him, “Banksie told me to give you this”, or words to that effect. Mr Hutchison also said that the envelope was sealed when he got it.
[95] Although there is no evidence to suggest that Mr Banks knew precisely what was in the envelope, there are a number of established facts from which the inference can be drawn that Mr Banks knew that the envelope contained a donation. There are the circumstances of the meeting with Mr Morrison, the handing over of the envelope and the fact that it had a SkyCity logo on it. Further, Mr Banks instructed
Mr Campbell to hand the envelope to Mr Hutchison. Mr Hutchison was in charge of finances. The fact that Mr Banks asked that the envelope be given to him suggests that Mr Banks was aware that the envelope contained a cheque. In my view, Mr Banks must have known that the envelope contained a donation. Mr Jones, on Mr Banks’ behalf, accepted that this was the case.
[96] Mr Hutchison initially thought that the SkyCity donation had come in the mail, but accepted that it may have been handed to him by Mr Campbell. He opened the envelope. He thought that there was a compliments slip inside it, and said that, at some stage, he rang SkyCity. He thought (but was not sure) that the person he spoke to was a Mr Peter Treacy – SkyCity’s general counsel, that he thanked Mr Treacy for SkyCity’s support of Mr Banks’ campaign, and that he asked Mr Treacy whether SkyCity would like a receipt for the donation. He also said that he asked Mr Treacy whether SkyCity wanted the donation recorded, and that Mr Treacy told him that it should be treated as being anonymous. He recorded on the bank statement that the donation should be recorded as anonymous. The narration read as follows:
Deposit slip – wants kept anonymous – check??
Mr Hutchison explained that this narration may not have all been written at the same time, and that he may have written the word “check” initially, and the balance after he had spoken to a person at SkyCity.
[97] Given the evidence of Ms McKinnon and Mr Morrison, I doubt that there was a compliments slip with the cheque. The envelope was, however, marked as coming from SkyCity. It may also be that Mr Hutchison was mistaken when he said that he spoke to someone at SkyCity. I do not accept that he spoke to Mr Treacy. Mr Treacy gave evidence and could not remember any such conversation. Nor do I consider that Mr Hutchison spoke to either Mr Gaukrodger or Mr Morrison. Had he spoken to any one of those three individuals, he would not have been told that the donation was to be treated as anonymous. Clearly, SkyCity did not want the donation to be anonymous. It wanted it to be open and in the public domain. Mr Morrison, Mr Treacy and Mr Gaukrodger knew this. It may be that Mr Hutchison spoke to somebody else in SkyCity’s accounts department, who mistakenly told him that SkyCity wanted the donation to be anonymous. In any
event, I consider that whether or not Mr Hutchison contacted anybody at SkyCity is beside the point. The key issue is whether Mr Banks had knowledge of the donation from SkyCity.
[98] In his police interview, Mr Banks stated that he had no recollection of the meeting at SkyCity’s offices. He said it was his understanding that the SkyCity donation was made anonymously.
[99] Having considered all of the relevant evidence, I am satisfied beyond reasonable doubt that Mr Banks did know that he was receiving a donation from SkyCity. I accepted the evidence of the various SkyCity witnesses in this regard, and also the evidence of Mr Campbell and Mr Hutchison. I reject Mr Banks’ assertion in his police interview that the donation was made anonymously. While there was no direct evidence that Mr Banks knew the amount of the donation, it was a donation from a major corporate entity – indeed, on the evidence, Auckland’s largest rate payer. In my view, it could reasonably be inferred that the donation would have been for a not insignificant sum. Mr Jones responsibly accepted that I could properly infer that any donation would have been known by Mr Banks to be of “a declarable amount”.
[100] Mr Jones put it to me that the Crown had to prove that Mr Banks had knowledge of the way in which the donation had been recorded in the electoral return, and that the way in which it had been recorded was false. I come to knowledge shortly. For present purposes, I was satisfied beyond reasonable doubt that the electoral return was false in a material particular, because it declared the SkyCity donation as anonymous, in circumstances where Mr Banks knew that SkyCity had made a donation to his mayoral campaign, and where it could reasonably be inferred that Mr Banks would have known that the donation was for a sum in excess of $1,000.
[150] When he signed the return on the basis of Mr Hutchison’s assurances, Mr Banks knew that he had not provided Mr Hutchison with the critical information, namely that he knew about the donations from Mr Dotcom.
[151] Mr Towers’ file note of his discussion with Mr Banks in February 2012 was telling. In my judgment, the file note constituted an acknowledgement by Mr Banks, not only that he knew that Mr Dotcom had made a donation to his mayoral campaign, but also that he was aware that that donation had not been publicly disclosed. Why else would Mr Banks have said that it might backfire on Mr Dotcom if it became known about his electoral support?
[152] While Mr Jones enjoined me to find that Mr Towers’ file note referred only to
“election support”, and not to a donation, I did not agree that it could be construed so
narrowly. As I have already noted, the evidence did not disclose any other election
47 Crooks, above n 20, at [59].
support which Mr Dotcom provided to Mr Banks. While there were discussions about digital campaigning, the provision of email addresses, placing ads for Mr Banks’ mayoral campaign on Mr Dotcom’s websites and providing free membership to MegaUpload for persons who agreed to support Mr Banks, none of those possibilities eventuated. The only other possibility was that there was evidence suggesting that Mr Banks asked Mr Dotcom to support the ACT Party, perhaps sometime in early 2011. However, the evidence was also that Mr Dotcom refused to do so. Other than Mr Dotcom’s donations to the 2010 mayoral campaign, there was no other election support which the words carefully noted down by Mr Towers could refer to.
[153] I consider that, in relation to the Dotcom donations, Mr Banks engineered the situation. He had the opportunity to check the returns. He refrained from doing so. Rather, he sought to insulate himself from actual knowledge of the falsity of the return by seeking an assurance from Mr Hutchison.
[154] I am satisfied, beyond reasonable doubt, either:
(a) that Mr Banks had actual knowledge that, at the time he signed it and at the time it was transmitted, the return of electoral expenses was false in a material particular in relation to the Dotcom donations, because he knew that he had not given to Mr Hutchison or anybody else in the campaign team the information that was required if the return was to be accurate, or
(b)that Mr Banks deliberately chose not to check the return to see whether the Dotcom donations were properly disclosed, because he had no real doubt as to what the answer was going to be, and because he wanted to remain in ignorance.
[155] For these reasons, I found the charge proved.
Wylie J
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